navigating complexity

purThe pose principle PURPOSE

Why having 2018

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strength Think:Act #25

Silicon Valley wakes up Thinker Charles Handy to the downsides of explains how we need to its device-driven dreams reinvent capitalism 2 Think:Act 25 in this issue in this issue Think:Act 25 3

"There's a temptation to solve too many problems in ­one solution. If you make a solution too heavy,­ it sinks under its own weight."

NANDAN NILEKANI Co-founder of Infosys and the architect of India's Aadhaar ID program → page 74 "One of the key qualities of an ­enduring company is that the founders instilled a sense of being there to serve a purpose that's larger than getty getty images

/ any of us." .coreyrich.com (2) .coreyrich.com www

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JIM COLLINS Leadership expert and author of Good to Great and Built to Last → page 28 to: corey rich corey to: → page 30 photo: photo: jonathan torgovnik pho 4 Think:Act 25 in this issue Think:Act 25 5

"Social media acts as the conscience of the company and holds it accountable for doing things wrong while also rewarding "As individuals, it for doing we cannot live without things right." a sense of purpose.

CHARLENE LI It is the same in business: Social media expert and founder of Altimeter Companies with → page 22 a strong sense of purpose have a more meaningful square

/ and longer life."

CHARLES-EDOUARD BOUÉE CEO of Roland Berger photo: pr photo: photo: khanh renaud 6 Think:Act 25 in this issue in this issue Think:Act 25 7 Think:Act 25

Think, act The and stay informed purpose issue 64 Russia's growing pains illustration: filippo fontana illustration:

| A re-elected ­Vladimir Putin is 8 At a glance looking to boost institute / Interesting stuff you need to Russia's economy. know – in a snapshot. Will it prove a force to be reckoned with, 22 Build a circle of trust or a busted flush? Leading social media­ expert Charlene Li gives some key pointers for sharing purpose

agentur focus; frank herfort focus; agentur 54 74 and staying on the right side 24 / Quantum leap 1,354,051,854 pairs of the interactive internet. "Social media­ A new revolution in computer­ of eyes in India creates­ a Silicon Valley technology is getting ready The world's most audacious­ 30 Good purpose sticks virtuous­ circle." gets a conscience to make its way out of the lab national biometric ID program­ Business thinker Jim Collins and into the real world. was built on sophisticated­ shares his thoughts on how Silicon Valley is waking up to technology and the vision­ the path to an iconic company the irony of digital addiction 60 Handy observations of its architect,­ Infosys is paved with understanding "We can ­becoming a "trending" ­topic as a Visionary thinker Charles co-founder Nandan Nilekani. how to be most useful. growing coalition of academics­ Handy explains how we need university of virginia; florian lang virginia; florian of university be the and technologists takes it to / to reinvent capitalism. 80 Food for thought 34 Cleaning up business generation task over the downsides­ of its Take a deep dive and find out Waste management is a device-driven­ dreams. 70 Sprinting to a digital more in related articles and ­global issue with local impact.­ that makes future studies. As the world faces up to the business Adidas Head of Sales ­Roland problem, the United Nations Auschel talks about a three- is calling on business to get better." point digitization plan that serious about sustainability. 12 46 florence ashley pr; photos: will edge out the competition.

| The purpose Dream 42 Faith matters of business is weavers Religious ­values can be purpose For Jaipur Rugs, a force for good – but can the key to global they also offer business Existing for more than success was Think:Act a competitive advantage? profit alone –it's ­­ not just a passing simple: Stay online 82 What makes trend, it's the means focused­ on your For more from this issue of Think:Act capitalism tick? to survival in a new purpose­ and as well as our archives, please go to: the rewards will Stakeholder theory pioneer corporate climate that https://www.rolandberger.com/en/ follow. insights/Magazines.html R. Edward Freeman answers demands engagement.

three questions on purpose. camille kachani artwork: cover + back cover 8 Think:Act 25 at a glance Think:Act 25 9

Re- Think Food Thoughts to in for thinking numbers thought live by buzzwords

putting Get to grips with new a figure on… Can social media be a force for good? industry lingo in a flash Solar power by Michal Kosinski "Stop with our stripped-down explanations of the social media has come under ­social media – Facebook particularly latest jargon. heavy criticism recently for breach of – to mobilize voters who otherwise ­chasing $46–53 privacy and trust. Yet there are many would not have gone to the polls. per megawatt hour. ways social platforms like Facebook Those who question the legitimacy That’s the current cost of solar-generated electricity, or Twitter can be a force for good. of these elections would do well It can engender trust and even expose to remember that one person’s the money making it significantly less than coal ($60–143), people to views outside their own propaganda is another's successful natural gas ($68–106), echo chambers. Social media has get-out-the-vote campaign. To quote or nuclear power ($112–183). also become a powerful tool against actor Thomas Jane, what makes us standford graduate school of business of school graduate standford /

and start That means it’s nearly ­societal isolation. It has made the human "is our interconnectedness "Dark Data" difference between someone being an among people. It's our ability to form outcast or a fully engaged member and maintain relationships. It's the of a community. It can also be a barometer by which we call ourselves chasing the There's a new(ish) data tremendous source of information. human." If so, social media is the buzzword on the block and, 86 % lifeline to our humanity. like big data, "dark data" Consider, for example, people cheaper holds a huge amount of affected by rare health conditions. to produce than it was in passion." potential. It's called "dark" 2009. And today, almost a Social media has made it possible for because there's no tool that decade later, solar power people to connect with each other can capture or unlock it, or it generates just instantly, easily and cheaply around — Tony Hsieh isn't structured in a way to mutual concerns, treatment options CEO of Zappos make use of it ... yet, that is. It

and shared interests. Social media photography rothstein nancy images; getty includes spreadsheets scattered across a company,

has also ­increased civic engagement afp/ /

around the world, allowing political perhaps considered useless by one department, but candidates to reach voters directly 400gigawatts ­potentially highly valuable to of the world’s power, with relatively little cost. The recent another. So what is dark now, less than 1% of the ­controversy around Cambridge michal kosinski is assistant could, as data analysis 25,000 terawatts Analytica and its alleged role in Brexit professor of organizational behavior improves, provide a bright generated annually. But and the 2016 US Presidential election at the Stanford Graduate School advantage if it's kept for long enough to be of use. the installed base of solar demonstrated the effectiveness of of Business. vatsyayana manan photos: power is doubling every 2.4 years. Battery prices are falling too. In 2010, lithium-ion batteries cost $1,000 per kilowatt hour. Today, that same storage capacity costs $178 and the lower the price of batteries goes, the easier it will be for utilities to cope with fluctuations in supply or demand. sources: lazard; solarpower europe; bloomberg AT A GLANCE 10 Think:Act 25 at a glance 11

Economic impact The Skin in the Game: Hidden act Chain Best red ed Asymmetries in Daily Life by reaction practice read Nassim Nicholas Taleb. 304 pages. Random House. $30.

If you see that someone's toilet paper in taiwan How to ... Black swan private life conflicts with What happens on one side ­ advice their words, trust what they work with noise do more than what they say. of ­the world can have an effect Too busy to read the hot new If a car salesman tries to sell on the other. Chain reactions – you might think you need you a Detroit car but drives a a nice quiet place to work, book everyone is talking or rather supply chain Honda, his wares may have but what you actually need is A storm brewing about? We have it covered for a problem. Not everything ­reactions – are an ­unpredictable a little bit of noise. ­According you. Here's Nassim Nicholas for coffee producers that happens happens for a to The Journal of ­Consumer "Black Swan" Taleb's new offer part of doing business. Research, a ­little bit of noise reason, but ­everything that cut down to its essentials, in Here we take a look at how – or should that be sound? – survives survives for a reason demand for coffee remains as the style of the original. makes you more creative. strong as a double espresso. And while … If the beard is black, heed panic toilet paper buying ­Really. Or, in the language Europe accounts for almost 30% of don't tell me what you the ­reasoning, but ignore the of the ­researchers: "A high in Taiwan began with a forest global coffee consumption, China's taste think: Tell me what's in your ­conclusion. If the beard is gray, ­level of noise may cause a fire in Canada. for java has doubled in the last five years. portfolio. On Wall Street, as consider both the reasoning great deal of ­distraction. A But there’s a threat on the horizon: well as almost everywhere else, and the conclusion. If the beard ­moderate level of noise, climate change. As temperatures rise, the people to trust are those is white, skip the­ ­reasoning, ­however, enhances ­creativity by prompting abstract experts say that half of the land used who have something on the mind the conclusion. ­thinking." That's what a to grow coffee will no longer be arable line – or rather those who have ­growing army of freelancers by 2100. Ethiopia, the birthplace of the skin in the game. FIRES in the forests of have also discovered – ­gentle bean, could be profoundly affected. Historically, warlords and café clatter can increase your 1 Canada in 2017 cause a It could lose 60% of its production by warmongers were warriors price hike on timber and productivity. The folks at 2050. So Ethiopia's coffee growers, themselves. With few curious lead to supply disruptions ­Coffitivity even created an in short-fiber pulp. That app to recreate the sounds of who are thought to have been the first exceptions, societies were run plus a few problems with ... coffeehouses anywhere from to recognize the stimulating effect by risk takers. But through ­Brazil to Paris – so you can of coffee a thousand years ago, could bureaucracy people have carry creative café "noise" on find themselves filtered out of a learned to separate themselves GOVERNMENT takes your phone and headphones business they pioneered. from the consequences of 5 action and Lai Ching-te, wherever you go. their actions. This is dangerous the premier of Taiwan, urges PRODUCTION in Brazil ­because transferring risk citizens via Facebook not to panic and cause a run on 2 contribute to a pulp price ­impedes learning and evolution. toilet paper. rise on the world market. The When decision-makers don't effect is felt in Taiwan, which

relies much more on pulp ticon.com have skin in the game, systems imported from abroad for ... images fla

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complex and then collapse. If a PANIC BUY and toilet banker's profits accrue to him 4 paper flies off the shelves in Taipei: five while his losses are transferred million packs are sold to society as a whole, hidden within three days on risks will continue to increase one website – 22 times more than usual. TOILET PAPER until the final blowup. 3 production than other You should avoid taking countries who use recycled paper. Producers warn of a advice from someone who

possible price hike of pettersson per-anders images; gives advice for a living. How 10–30%. Customers ... getty

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much you truly believe in something can be shown only by demonstrating what you are willing to risk for it. Those who talk should do and only those sources: ft; bloomberg; nyt. icons: freepik, vitaly gorbachev vitaly freepik, icons: nyt. sources: ft; bloomberg; who do should talk. rm moment photos: AT A GLANCE 12 PURPOSE OF BUSINESS Think:Act 25 13

In focus THE In this issue we take a close look at purpose and what it means for business. pur pose OF

PURPOSE business is PURPOSE 14 Think:Act 25 Purpose of Business Purpose of Business Think:Act 25 15

The long-held assumption that

businesses exist simply to make q&a: finding the right purpose money for shareholders is being challenged. There is a growing trend to focus on the longer term The Millennial Not too big, view and the wider social impact that not too small, George Serafeim, Professor of business a business can have. How has administration, just right Harvard Business School this shift come about? And, more % importantly, how can a successful 84 → how do companies define and develop an authentic purpose? We ask George Serafeim, Jakurski family associate professor of business administration at company embrace "purpose"? Harvard Business School. say making a difference is more think:act: You have argued that a there have to be credible incentives that are important than crucial aspect­ of purpose is its inherent aligned to the purpose, not against it. professional recognition by Janet Anderson ­intangibility – it's not something to be artwork by Camille Kachani found in a formal announcement. How, Is there a danger that defined values could then, should a company­ go about defining become a straitjacket? % its purpose? Purpose should not be a straitjacket. It 70 serafeim: For me it is about developing a needs to be adaptive and respond to the shared understanding in an organization ­environment, but not change too often – say giving back about the meaning of work. It needs to it's a question of getting the balance right. and being civically answer the questions: Why do people in PURPOSE PURPOSE engaged are this organization come to work? What How important is it to measure success? their highest priorities characteristics bond them together? There has to be a way of measuring success, ith his 1962 book Capitalism and of knowing if the company is moving in the Freedom, the influential economist How do you avoid overstretching or being right direction. This is extremely important Milton Friedman set out the ground too narrow? – otherwise it is just cheap talk. rules for how business should inter­ Mission statements can all tend to sound act with society. "There is one and 94 % the same. A sense of purpose needs to be W specific to a particular organization. It must "Purpose should not only one social responsibility of business," he wrote, and that was to "use its resources and also explain the organization's competitive be a straitjacket. ­engage in activities designed to increase its profits positioning in this respect – what it is that it

pr. sources: bentley university cwb; ivey business journal business cwb; ivey university pr. sources: bentley of a college-educated / so long as it stays within the rules of the game, sample are asking adds over and above the others. It needs to be adaptive which is to say, engages in open and free competi­ themselves: "What is tion without deception or fraud." In other words, it the best use of my heart What kind of internal structures are and respond to is none of business's business to get involved with and mind?" ­required to do that? the environment." anything other than creating value for share­ It helps to align the purpose with the type

holders. Or as it has been reduced to a now famous russ campbell photo: of people the company hires. Many orga- ­adage: The purpose of business is business. nizations have learned that it's one thing What are the costs and benefits? But while that statement was once held as a to develop a sense of purpose, another to The benefits are a workforce that is more certainty, it is now being squarely challenged. execute it. This can be supported through likely to be productive, innovative and ­Today's businesses view their social responsibili­ the recruitment and retainment processes. supports efforts for change and adopting ties a little more widely. Marc ­Benioff, CEO of new practices. But there are costs too. It ­Salesforce, has put it quite ­bluntly: "To be truly What does it take to maintain a sense of requires hard work and management atten- ­successful, companies need to have a corporate purpose in an organization? tion to maintain the culture. It also means mission that is bigger than making a profit." Since You need clarity about how employees will saying "no" to business that does not fit he made that statement, the corporate world has be enabled to achieve their purpose. It has your purpose and sometimes investing largely embraced the idea that its role goes to be supported by senior leadership and where others won't. 16 16 PURPOSE the talk Walking – we have seeniton the employment side "information economy" in the 1970s to →       There isnoonekind. We have identified There is the organization striving to build :       :    :: Think:Act 25 values-driven organization: Here values : What doesagenuinely purpose-driven three key types, however. There is the too. People don't go to work just to geta the change,andnot juston the retail side then from the industrial economy. The People started to spendmoney to bring this? We ask Aaron Hurst, author of the 2014book The PurposeEconomyfounderand the that this ishappening? are growing in the job. and "whatis the right thing to do?" is the are at the core of all decision-making sense of connection–it was too sterile. economy isshifting to anew model –one doing matters to the world and thattheymatters tothe world doing connection back into their lives. In every eiciency andscalebutit was missinga happening shift that was describe the economist Marc Porat, coined the term economic evolution. My uncle,Stanford excellence, where the purposeisits craft question behindevery critical decision. Its purposeis to empower people to find andbuild their own. People don't like to feel they are being fooled. What dobusinesseshave to do to counter paycheck; they wantfeel to what theyare industry we have studied we have seen information economy model allowed for driven by purpose. What are the signs and CEO of Imperative, anorganization that definesitself asa"human-centered career business look like? platform that helpsbusinessesand workers develop meaningful careers." In other words: Igrew up with conversation about You have said you believe the as shams,customers vote with their feet. 85 of purpose-driven companies the choiceevery day to work with purpose that impact. Within eachof these types impact-drivenorganizationthe thattakes Purpose raises the bar. It's not justabout Early on,having social impactcouldbe about having inspired employees. a dierentiator. Now that the market is about purposeandconnectit to the orga- are doing well are the ones that help forefront.at the organizations The that and its focus onquality work. Then there is growth. Thefi dropsto gure showpositive top-line same thing andstandoutin that context. of organizations are individuals who make non-purpose-led companies. having engagedemployees anymore, it's have to compete with peopledoing the holders andproactively seeks to optimize mature, it's tougher – you can't fake it. You Howevolving?is thistrend nization's purpose. responsibility for itsimpactonstake- just 42% when lookingat individuals to haveself-awarenessindividuals to that PURPOSE OFBUSINESSPURPOSE

Author of The Purpose Economy % and CEO of Imperative Aaron Hurst, Aaron Hurst,

performance, only deliver show how how show a positive bution to company must not financial it makes but also CEO of BlackRock society." "Every contri- Larry Fink,

:   ;   Just a 21 casual lookatafew flonlineglamorous and gainingfavor is uencer" look good. It was now recognized as a stra- a as recognized now was good.It look company a make to gesture a simply longer of end the toward was It PR. with do to more had corporate of concept The event. community local they how appeal to customers.       interest and the profithe and interest fall- have to appear motive t younger consumers. All of which points to how so- began to grow that being good could also be good affnot could businesses – line bottom ord up the news agenda, social came responsibility out began to grow that being good could also be good from distinct activity an still was it then even but businesses run themselves, how they hire staff and brand advocates are making way for "activist influ- r sucs r h fins n dmg t public to damage fi and the nes or resources by did businesses something was responsibility et o iprat ass hm bte with better chime causes to important ment years few a just nonsensical seemed have might sold also Importantly,pollution.it for reputation public to damage fi and the nes or resources by did businesses something was responsibility with better chime causes to important ment reveals purpose in a number of guises: Companies redefi what ne it. implements and means purpose problems were issues that could hit the hit could that issues were problems forfor business.business. o goe h goig criy f natural of scarcity growing the ignore to environmental requirementbecause tegic the 1990s that this started to change, and the idea the company's core business and,strategy o›en, it the put and sanity to back world this bring to of the PR room and into the boardroom. It was no contributing to a charitable cause or sponsoring a signifia plays now purpose how cialin role cant of business extends now to fi ills. Or,xing society's greater good ahead of self- interest." well with with well to spread has it then Since customers. deliveringprofi beyond well ts. just longer no It's social responsibility (CSR) socialtook hold inresponsibility the 1990s, social responsibility (CSR) socialtook hold inresponsibility the 1990s, as Paul Polman, CEO of Unilever puts it: "We have encers" whose whose encers" commit- and values authenticity, ago.social"in-mediaIn kindmarketing,of new a that title job a – purpose" of are "heads hiring rapidly to begins business as wayside the by en about running successful companies; the purpose As climate change and the environment rose environment the climateand change As ht ruh o ti traon? Self- turnaround? this on brought What ht hwn social showing that st -century companies -century PURPOSE OFBUSINESSPURPOSE    " "      , have to think about the impact they have on the on have they impact the about think to have in the long term. As the head of the world's largest r trs n hg axey – anxiety" high and returns wrote Fink, BlackRock'sthat CEO,so much Larry r trs n hg axey – anxiety" high and returns rather vital rather forvital long-term survival. Today, ment. simplynot is purpose desirable,but from CSR in that it runs through a company's a it through that runs in CSR from h eeis f capital of benefits the to other CEOs in his letter at the end of 2017 that 2017 of end the at letter his in CEOs other to h eeis f capital of benefits the companies without social purpose have no chance that he should make such a strongly worded state- rwh ohr have others growth, rwh ohr have others growth, hl sm hv reaped reaped have have some some while while high of paradox "a being as in currently are we diffwider purpose and – itself society erentiates structure and strategy.structure company,management very asset is it significant now Businesses issues. other many encompass How How did we get here? Fink described the state so so Think:Act 25 17 17 PURPOSE 18 Think:Act 25 PURPOSE OF BUSINESS PURPOSE OF BUSINESS Think:Act 25 19

       

faced low rates, low wage growth and increasingly isn't working out for 17% job insecurity coupled with the growing shareholders looking for good threat of inadequate pensions. Fink returns," she said. Then there's the Talking higher fi nancial performance believes that, as a result of these pressures, second key driver, which is climate can be attributed to clearly people are now looking to companies to respond change. "Young generations are increasingly the walk conveyed corporate purpose. 3xAccording to a 2014 to broader societal challenges. "To prosper over concerned about its eff ects because they will be study conducted time, every company must not only deliver fi nan- the ones who bear most of its costs," she said. "As →   
   Indeed, it seems there is a shift away from by Burson-Marsteller a clear sense of purpose short-term investment – a shift that Lynn cial performance, but also show how it makes a they see it, shareholder value doesn't work for the in Nordic countries,  positive contribution to society. Companies must planet, so it's not going to work for them." communicating purpose among its employees, how does it go about Stout, a professor at Clarke Business Law benefi t all of their stakeholders, including share- is three times communicating that to the outside world Institute, welcomed. "If you hold your holders, employees, customers, and the commu-     ,        has shown more important to and how can it show that it means it – that funds for less than two years, you are really nities in which they operate," he wrote. itself in surveys to be very committed to its values, stakeholders than its purpose is authentic? just renting your stock instead of owning Lynn Stout of the Clarke Business Law even to the point of being willing to sacrifi ce communicating it – you don't care about long-term sus- Institute at Cornell School of Law, who lost her material gain for them. "There has been a key shi› fi nancial performance. Talking about purpose in the right way can tainability or reputation, you just want the long battle with cancer in April 2018 a few weeks in people's perceptions away from believing that be critical to success. Research by public share price to go up as quickly as possible," a› er sharing her thoughts for this piece, was not pursuing your own interest serves society's relations consultants Burson-Marsteller she said. By contrast, a long-term invest- at all surprised by these shi› ing outlooks when it interest," said Stout. Are we beginning to see a in Nordic countries in 2014 found that ment environment in which shareholders comes to business. The author of The Shareholder convergence in interests, where good CEOs customers in that region are willing to pay hold their shares directly is one in which a Value Myth: How Putting Shareholders First Harms a premium for products and services from shared sense of social and moral purpose Investors, Corporations and the Public, she had been a company that they view as responsible can fl ourish. Corporations can only serve arguing for years that focusing only on maximiz- and that corporate purpose is three times the social purposes we want them to serve PURPOSE PURPOSE ing shareholder value is a mistake. She believed "There has more important than fi nancial perfor- if they have the space to look towards long- this message was fi nally getting through. "Things mance for corporate reputation overall. term projects that provide social benefi ts. have really changed," she said. "Shareholders, been a key shift Internationally well-known companies like particularly institutional share holders, are increas- Lego, Carlsberg and Volvo came out high in With "conscious capitalism" on the rise ingly recognizing that the old strategy of asking in people's the survey results. and sustainable investing no longer a corporations to focus on so-called shareholder niche activity, companies need to work out value simply doesn't work, even for shareholders." perceptions away Burson-Marsteller found that one of the how to articulate their purpose to share- Stout believed that one of the precipitating most e ective tools for engaging with holders and show that they understand events to this shi› in attitude was the global from believing consumers on these issues – whether it their impact on their community, the fi nancial crisis that began 10 years ago. "We've had be the company's commitment to social environment and society at large. a number of crises over the past years. It that pursuing responsibility or the wider impact they have on society and the economy – is Social engagement your own interest social media, because this enables the A quarter of Nordic consumers have conversation to go beyond advertising and recommended a company because it acted serves society's promotion into genuine discussion and responsibly and social media is a key dialogue. Engaging with consumers on the communication strategy. How important is it interest." company's values and practices helps build to have a strong presence on social media? loyalty to its brands. Lynn Stout, 40% Professor at the Clarke Business Law Institute at Customers are not the only stakeholders 30% Cornell School of Law that it is important to communicate to about purpose. Larry Fink, CEO of New 14% 15% York-based investment fi rm BlackRock, says that investors, particularly long-term ones, want the opportunity to engage with Somewhat Very Not very Not at all

: :       companies to help foster long-term value. important important important important 20 Think:Act 25 PURPOSE OF BUSINESS PURPOSE OF BUSINESS Think:Act 25 21

:     Long-term

in success Michael Bzdak, Global director of employee engagement in global times of change community impact at J&J

→  ‡ˆ‰Š, Œ   Ž J  ’ then chairman, Robert Wood Johnson, formulated a "credo" for the pharmaceutical and medical devices company. It sets out the company's responsibilities toward a wide range of stakeholders – customers, suppliers, distributors, of professionals employees, local communities, the environment and stockholders. The company says it is around the world not just a "moral compass," but a recipe for business success and the reason why it is one feel disengaged from of only a handful of companies that has fl ourished through more than a century of change. their jobs, according who intend to be in the business over the How has their credo helped them stand the test of time? We ask Michael Bzdak, global to the Purpose at long term, take social problems seriously? director of employee engagement in global community impact at Johnson & Johnson (J&J). Work 2016 Global Fink's letter suggests that this is what they should Report conducted be doing: Companies should not only avoid general social interest. Friedman believed fi rmly by LinkedIn and :: How has J&J's credo both a source of inspiration and aspiration. creating problems for society, but they should also that market mechanisms were the most Imperative. contributed to its long-term success? When people join the company, we create be actively involved in making contributions that appro p riate way to determine the allocation of  : I put it down to being an "and-and" opportunities for them to engage with it address society's problems. scarce resources to alternative uses in a free society. document rather than "and-or" – it doesn't as soon as they start – to make it a living To be fair to Friedman, he didn't see any say "take care of your patients and your document instead of a static document. problem with company owners choosing to do         '   of consumers," or "your employees and the We fi nd ways to connect individuals' good. "It may well be in the long-run interest of a opinion shares some similarities with that of the community," or "your shareholders." It's passion and purpose to the greater purpose corporation that is a major employer in a small 1970s in which, as Friedman described it, there about all four groups of stakeholders. of J&J. This is important too, especially community to devote resources to providing was "widespread aversion to 'capitalism,' 'profi ts' PURPOSE PURPOSE for young recruits with a strong sense of amenities to that community or to improving its and the 'soulless corporation.'" Perhaps the rules Has the credo been put to the test? social purpose. I used to think of us as an government. That may make it easier to attract of the game have not changed so much. Indeed, as The classic example was the Tylenol crisis old-fashioned company, but we're actually desirable employees, it may reduce the wage bill Stout pointed out, some of these ideas do have in the 1980s when an individual outside a very current company because of our or lessen losses from pilferage and sabotage or ancient roots: "If you look at the earliest the company succeeded in lacing some social mission. It's been there forever and have other worthwhile eff ects," he argued in an corporations in history, they were created to capsules with cyanide. Our credo made is in the DNA of the company – and young article in The New York Times. What made the pursue social projects that would last for genera- it easy to take the decision to pull all the recruits are attracted to us for that reason. diff erence for Friedman was that such decisions tions – they built monasteries, universities and product o the shelf. That's just one exam- should be taken by the owners of the company cathedrals," she said. "Business corporations for ple. I've seen it in action a number of times. operating in their own self-interest under the most of the 20th century had a similar philosophy Fostering commitment "cloak" of social responsibility – rather than by – managers were stewards of great social institu- How do you navigate confl icts between Johnson & Johnson expanded its parental corporate executives on the grounds of some tions run for the benefi t of stakeholder groups and leave program in 2016. It now retains stakeholder interests? the nation. It is only very recently that the focus 96.91% of the employees who take that We have regular credo sessions where has become much narrower." leave in the US and was listed on Fortune's leaders discuss how we measure against Change the World list in 2017. Whether we see it as a return to an older model our aspirations. Some of the issues facing or a turning point for capitalism, many diff erent them are di icult. Having discussion and 1 % 6 % "The blind pursuit voices are saying that business is changing in this including your stakeholders is a way to direction. We are entering a new era of responsi- resolve that. But I don't want to suggest it of profit at all costs is bility which off ers an opportunity for the private is easy. male female untenable. It's essential sector to help tackle issues that aff ect wider society and collaborate in designing solutions that create How does J&J's credo work today? that we make money sustainable value for humanity. As Indra K. Nooyi, In a time of low trust and high expectations CEO of PepsiCo, once put it: "The blind pursuit of for companies, the credo serves us well. It's returned did not return the right way." profi t at all costs is untenable. It is essential that we make money the right way. A› er all, if commu- Indra K. Nooyi, nities suff er as a result of a company's actions,

:  ; ..   .  ..  ;  :        : CEO of PepsiCo those returns are not sustainable." ■ 22 Think:Act 25 Comment Comment Think:Act 25 23

Listening and defining is a good start, but from could emulate. The company's stated purpose is to there you need to develop a relationship. Purpose isn't "connect people to what's important in their lives a "one-and-done" campaign that you can run for six through friendly, reliable and low-cost air travel" and it Build a circle weeks and then turn off. Too often social media finds has done this brilliantly on social media. This past its place as part of marketing planning when it is March, a social care team member named "Mike" was much more than that. It should instead be at the answering a mid-flight tweet from an irate passenger vanguard of creating the relationship your business who had paid for Wi-Fi but couldn't livestream a of trust needs, where you begin a conversation about your basketball playoff game of her beloved college. Mike corporate social responsibility (CSR) efforts. For explained that they limit livestreaming and then gave a example, "green" cleaning products brand Seventh quick update: "You're up at the half." The passenger Generation steers people who comment on their social asked a favor: "Any chance you can live tweet the How do you stay on the right side of the channels to their "Generation Good" community site, second half for me?" Mike obliged and turned an where they can provide feedback, submit ideas and unhappy customer into a raving fan – and spawned interactive internet? Become a master of even test products under development. multiple positive articles. Southwest Airlines also encourages all of its employees to use their own social media with these key pointers. personal social media accounts to share their experi- ences and passions at the company, trusting that they "The more transparent are aligned in a common purpose through a strong you are, the greater culture of customer service and training. Two final words of advice to help you harness social interest the audience media for your purpose: "Use it." Post frequently and use visuals. If you are doing good work that exempli- will have to follow fies your purpose, be sure to share it! IBM recently conducted a study that correlated the number of social your journey." media mentions needed to raise the prominence of CSR programs based on the company's net income. PURPOSE PURPOSE This makes sense – if you have a larger company, then by Charlene Li Relationships are based on trust, so your message you need more social media mentions to move the has to be honest. For that reason it's vital that you needle. One of the ways to increase mentions is to speak the truth, especially if you are unsure about include photos, videos or even livestreams of events what is going on. Here's an example: In 2006, one of because posts with visual elements boost engagements Dell's notebooks spontaneously burst into flames. and sharing. ocial media has been one of the biggest rewarding it for doing things right. People want to When a photo of the laptop started hitting social and The positive feedback loop created by social media seismic changes to hit business in the past work with businesses that do more than deliver great mainstream media, Dell wrote a blog post about it – can become addictive – you do good work, share it on decade. Businesses could once message their products and experiences – they want to align and included a link to the photo. That's right, the social and get rewarded with recognition that acts as S purpose and blithely believe that ­customers, ­themselves with organizations that reflect their company published a photo of one of its products positive reinforcement. The social media "flywheel" employees and partners accepted and trusted that the personal beliefs and that seek to make the world a blowing up and shared that while they thought it was a takes time, effort and resources to get started, but the purpose was being met. But today, social media gives better place. battery issue, they weren't 100% sure. Even today, 12 benefits of more aware and engaged customers and everyone the ability and voice to hold businesses There are a number of ways in which you can use years later, many companies struggle with telling the employees will be well worth it. ■ accountable for promises made. If you promise that social media to develop, live and reinforce your truth – or trusting that the relationship is strong Disclosure: Dell, IBM and Southwest Airlines have been your company will act with integrity, protect people purpose. The first is to ensure that you listen for enough with customers to simply provide an update. Altimeter clients. and the environment and dedicate a portion of profits purpose resonance. By that I mean that if you are in Be honest about your purposes, how well you are doing to these efforts, then examples of promises unkept will the process of redefining your purpose, social media but also the challenges and setbacks that you are be captured, shared and amplified. can be a fantastic way to figure out what resonates facing. The more transparent you are, the greater This capability strikes fear in the hearts of many with your customers. What topics in your past social interest the audience will have to follow your journey. businesses, but it doesn't have to. I've spent the past posts have gotten the most comments or shares? Or if Those three small interventions – listening and 15 years explaining how to master social media for the you have a new purpose statement, how is it being defining your purpose, developing a relationship and Charlene Li benefit of your business and customers. And I believe received? Social media is a messy, volatile cauldron of being truthful – can prepare the ground well for your that now it's even more important than ever to under- opinions, misquoted facts and hearsay. Filtering out purpose plans. Then you can move on to how you can Charlene Li is a principal analyst and the founder of Altimeter, stand how social media creates a virtuous circle in the noise is partly science, mostly art – so social media use social media within the company as a tool to push now a part of Prophet. She is the author of five books, which it acts as the conscience of the company and listening takes practice and time to draw meaning forward. Empowering employees is a case in point and including the New York Times bestseller Open Leadership, and

holds it accountable for doing things wrong while also from the data. pr photo: Southwest Airlines offers a good example that you the co-author of the critically acclaimed Groundswell. 24 Think:Act 25 Silicon Valley Silicon Valley Think:Act 25 25

Tech companies are being taken to task for "digital addiction" by a growing coalition of technologists, shareholders and academics. Are the pioneers of Silicon Valley at last waking up to the downsides of their device-driven dreams?

by Steffan Heuer illustrations by Filippo Fontana

arly march 2018: It was an unsual sight outside Apple's shiny new head- quarters in Cupertino, ­California. Four PURPOSE PURPOSE Stanford University computer ­science E ­students, all of whom have an ­internship at a ­renowned tech company on their ­resume, waved picket signs and handed out flyers. The group's name says it all: Stanford Students Against ­Addictive Devices (SSAAD). "We want to call attention to an increasingly critical problem," ­explains the group's co-founder Sanjay Kannan. "Device ­makers, and in particular app developers, have a responsibility to address the issue of addic- tive technology. We chose Apple because they are a trendsetter that ­everyone's watching. And they Silicon Valley are in the best position to do something about it." The student protest in the heart of Silicon ­Valley was one more example of the growing and, gets a more importantly, homegrown backlash against the tyranny of always-on devices, apps, services and platforms such as Facebook. SSAAD may seem inconsequential compared to the raging scandal over unauthorized access to the data of the conscience ­platform's two billion users and the controversy ­surrounding Russian meddling, yet it speaks to a larger point that goes far beyond Facebook. What exactly does technology do to ­humans? And what can – and should – the people who design those technologies do about it? 26 Think:Act 25 Silicon Valley Silicon Valley Think:Act 25 27

Silicon Valley is finally having second thoughts ­rebellious techies launched in early 2018 that humans, steering them like an ant colony. His about its greatest and most successful inventions ­encapsulates the growing remorse and guilt among ­presentation became one of the most internally "Silicon Valley's business as evidence mounts that they wreak havoc on indi- Silicon ­Valley elites about the (often unintended) ­requested ­topics at Google, Raskin ­recalls and viduals, families and society. As a result, the tech consequences of their urge to "make the world a adds: "Until the election of 2016 it was easy to model is surveillance industry is being forced to grow a conscience and better place" and score a lucrative exit. ­paper over this problem." It took the revelations address issues of safety, self-regulation and also about Russian meddling to give those ­second capitalism: Give products ­potential government intervention. While the 40 % when it comes to ­calling out the ­dangerous thoughts a unifying theme and urgency. term ­"digital addiction" may not have yet entered of Americans who do wnsides of technology,­ CHT is at the forefront. At Google's most recent developer ­conference, away for free and turn us the ­Diagnostic and Statistical Manual of Mental use social media The group was launched by former Google and CEO Sundar Pichai ­admitted something’s amiss. ­Disorders, the psychiatrist's handbook, it looks ­responded that it ­Facebook programmers and supported by a Who's “We want to help you understand your habits and into the products." would be "hard to ­increasingly as if spending your waking hours on Who of the industry, among them ­early Facebook focus on what matters,” he declared, all the while give up" using it in a Andrew Keen, Author of How to Fix apps, games and platforms designed for maximum investors and one of the programmers responsible introducing plenty of new features that intrude 2018 Pew Research the Future: Staying Human in engagement takes a measurable toll. "There is Center survey. for developing the blue "Like" button back in 2007. even more deeply into the ­private lives of the tech the Digital Age emerging research that kids and adults feel The number climbed "Technology is hijacking our minds and ­society," giant’s ­users. Artificial intelligence features such ­addicted to their devices. We still avoid the phrase to 51% in the declares the group's website, listing studies and as a voice assistant called ­Duplex that ­masquerades addiction from a diagnostic point of view, but we 18–24 ­demographic. anecdotal ­evidence about how smartphones and as a human created particular concern among can definitely say many people have feelings of apps hurt humans psychologically and physiolog- many technologists, even if Pichai proclaimed ­addiction," says Colby Zintl, vice president of ically. "We have all those wonderful technical tools ­Google had “a deep ­responsibility to get this right.” ­external affairs at Common Sense Media, an advo- and somehow used them to create this large weap- Big tech companies like Google are aware that cacy group based in San Francisco that researches on. We let whoever bids the most ­money point this Wall Street has begun to take notice, too, drawing and promotes healthy media use for families as gun at our heads," says Aza Raskin, one of the a connection between digital dependence and the well as educators. Her organization has now group's co-founders. future revenues, profits and valuations of tech ­partnered with the Center for While some might have concerns about the companies. In January, New York-based hedge Humane ­Technology ­application and use of the data, others fear what fund Jana Partners joined the California State even darker ­conclusion, making a connection (CHT), a group of tech is doing to the way we think. Tony Fadell, one ­Teachers' Retirement System in sending an open ­between new ­media screen time and adolescent of the creators of the iPod and ­iPhone, ripped into letter to Apple calling for changes to its­ ­technology. ­depression and suicide rates, especially among his peers with a tirade of tweets: "Apple Watches, "We believe there is a clear need for Apple to offer ­females. US teens spend an average of seven hours PURPOSE PURPOSE ­Google Phones, Facebook, Twitter – they've gotten parents more choices and tools to help them a day in front of some kind of screen, which comes so good at getting us to go for another click, ­ensure that young consumers are using your at the expense of interacting with other humans. ­another dopamine hit," making reference to the ­products in an optimal manner," the letter said, Critics argue that the current wave of remorse ­neurotransmitter molecule in the brain ­commonly citing research findings and media reports. needs to be transformed into action on three ­associated with addiction and pleasure. Roger fronts. For starters, consumers should take some ­McNamee, an early investor in ­Amazon, Facebook What exactly does research have to say about easy steps to blunt the worst effects of digital and Google demanded: "For the sake of restoring the impact of digital devices and services on our ­addiction [see p. 29]. It will be more difficult to pull balance to our lives and hope to our politics, it is well-being? To begin with, devices bring strife and the second lever, which can be called "coding with "We have all those time to disrupt the disrupters." Former ­Facebook tension to kids, teens and families. Almost half of a conscience." Companies have a moral obligation ­executive Chamath ­Palihapitiya has ­expressed all children polled by Common Sense Media say 7 and also a business incentive, the argument goes, wonderful technical ­"tremendous guilt" for his part in creating "tools they feel addicted to their phones, and three in hours. to self-regulate and think from the outset how to that are ripping apart the ­social fabric of how four families say that devices have caused discord The average make their products safer and less addictive. tools and somehow used ­society works." And even financier George ­Soros at home. Smartphones and tablets have a signifi- amount of time that "There are some people who are still in denial weighed in at this year's World ­Economic ­Forum, cant, negative impact on sleep duration and ­American teenagers [about] how their wealth is created and how their them to create this large saying that tech companies "de­ liberately engineer ­quality among school-age ­children and adoles- spend every day products tear apart society and democracy, but we addiction to the services they provide." cents, ­according to a 2015 summary review of 67 in front of some kind get more and more thank you notes every day," says weapon." It's a feeling of responsibility that tech ­insiders academic studies on the topic. While the verdict is of screen. CHT co-founder Raskin, whose late father Jef kept bottled up for far too long, admits CHT still out as to whether ­being on Facebook or ­developed the Macintosh computer at Apple in the Aza Raskin, Co-founder ­co-founder Raskin. "If you live in Silicon Valley, you Snapchat can really be compared to ­cocaine or 1970s and who therefore has a specific frame of of the Center for Humane Technology get up every day and go to work, thinking you'll battling a ­gambling disorder, studies have ­reference for what good design should focus on. make the world a better place. My entire career ­documented brain activity that looks For him, ­human-scale design is a big ­opportunity was about drinking that Kool-Aid." A key turning ­suspiciously similar to other ­addictions that should be taught in schools and colleges so it point, by many accounts, was a ­presentation that when it comes to how subjects are able – or can permeate the developer community. He sums then Google ­Design Ethicist Tristan Harris gave rather, unable – to control their impulses up the question as: "How do you make great prod- ­inside the search giant back in 2014. He lamented and inhibitions. ­Psychologist Jean Twenge ucts that don't cater to our impulses but ­appeal to the vast ­influence Google yields over two billion at San Diego State University has drawn an the higher stack of human qualities?" 28 Think:Act 25 Silicon Valley Think:Act 25 29

Give me a buzz: The third point is regulation. "The The Future: Staying Human in the Digital Age – says your brain on smartphones fact is tech companies have so far contrition is not enough. ­"Silicon Valley's business A recent study done by McGill University claims ­gotten a free pass and are completely model is surveillance capitalism: Give products unregulated. It's more heavy lifting away for free and turn us into the products." that smartphone addiction isn't inherently antisocial, than the other steps, but we're suggesting but rather an expression of a primal need to add a seatbelt or an airbag to Facebook," Citizens need to fight back and impose human for social reward. says Common Sense's Zintl, drawing a parallel values on technology with commonsense tools like to mandated updates to automobile safety that civic engagement, education and, yes, regulation, 60 seconds have long become accepted standards. The argues Keen. "If it's true that we live in a ­system of in social media ­systemic changes critics propose, however, are surveillance capitalism, changes cannot come The number of interactions much deeper and wider than adding the equiv- from the five big platforms because we have a that occurred, on average, photos uploaded alent of an airbag. If the root of the problem ­winner-takes-all economy that stifles innovation during every minute of 2017 photos uploaded snaps uploaded on Facebook on Snapchat lies in the fact that the business model of and competition," Keen warns. give a clear view into the on Instagram ­Google or Facebook is built around tracking Taken together, the long overdue public socially driven motivation behind smartphone use. and manipulating user behavior and turning soul-searching among Silicon Valley's best and messages sent tweets posted it into advertising dollars, regulation would brightest may well bring change. First, a blend of have to force them to change how they operate heightened awareness and wariness among users – and how they make money. "When the British of what they're getting into by tapping that "I agree" A. Unexpected reward B. Expected reward Empire gave up slavery, it gave up 2% of its GDP for button. Second, governmental and self-imposed 60 years, but it was the morally right thing to do," regulation of the dominant players nudged along ­argues Raskin. "If companies want to do some- by frameworks such as the EU's General Data thing that protects democracy, they need to give ­Protection Regulation that took effect in May. And Dopamine Dopamine up some revenue. Or why not hold them respon­ third, the dark horse of emerging competition – surge baseline cue reward activity baseline cue reward sible for the content they promote, that would and eventual economic success – by entirely new baseline buzz of unexpected baseline buzz of message from ­hugely change the ­incentives." companies that are driven by a different set of Digital or not, social notification Facebook 'like' notification loved one ­interaction activates Andrew Keen, a razor-tongued tech observer ­values, among them design that doesn't merely ­dopamine reward circuits in and author of four books on the tech industry's look at the interaction between a machine and an PURPOSE our brains. The intermittent C. Negative prediction error type 1 D. Negative prediction error type 2 PURPOSE failed promises – the latest one being How To Fix individual, but society as a whole. ■ and unpredictable schedule of smartphone no­ tifications creates a state of arousal that is more ­correlated with reward anticipation than Dopamine activity Long-term well-being is not about instant gratification with the reward itself. baseline cue no reward baseline anticipation no reward baseline buzz of spam mail baseline patterned impulse phantom notification to check phone phone Mr. Havens, is it necessary mean AI is "bad" or "evil," but You head the Global Initiative in your opinion that we start that engineers, programmers on Ethics of Autonomous and building ethical principles into and practitioners need new ­Intelligent Systems of the IEEE, hardware and software? levels of due diligence to the world's largest association Being more "connected" to ensure they can avoid ­negative, of engineers. What has the How to devices or screens doesn't ­unintended consequences. project accomplished so far? limit addiction inherently increase short- or The second version of Ethically long-term happiness. That's Do algorithms need to adhere to Aligned Design (EADv2) is why we need applied ethics, human values? Can they align ­currently ­available on the IEEE Technologist John C. Havens or values-based design, to with both our well-being and website. We address these is the executive director of the help people creating artificial need for gratification? ­topics in 13 different sections IEEE Global Initiative on Ethics ­intelligence (AI) and machines The baseline is human values, created by over 250 global of Autonomous and Intelligent to delve deeper into both but put into the context of your experts, and ­developers can Systems. He answered a few end users' values and new regional and cultural values. We already use EADv2 today. Just questions for Think:Act on the issues arising from these also need an analysis of what like the IEEE created the Wi-Fi Consumers can take some easy Turn off notifications — no Set the phone display Banish all devices from importance of machine ethics. ­technologies. AI directly affects can increase people's long- standard, these standards steps to blunt the worst effects 1 buzzing, flashing or pop- 2 to grayscale in order to 3 ­defined areas of life, such ­ The statements he makes here human agency, identity and term well-being or flourishing. will help guide companies of digital addiction, dampening ups unless they come from a make it more boring. Stanford as when sitting down at the do not necessarily reflect the emotion in ways many other And that's not about instant and developers to implement the feedback loop that hooks real human. students have called on device dinner table or when going to opinions of the IEEE. technologies don't. That doesn't ­gratification. ­values-driven design.

sources: statista; frontiers in psychology frontiers in psychology sources: statista; our brains with little dopamine ­manufacturers to make it easier bed at night. spurts every time a notification to enable those features, just or new photo comes in. like switching to airplane mode. 30 Jim Collins Think:Act 25 31 GOOD PURPOSE STICKS What does it take to build an iconic company? If you ask influential author, researcher and advisor Jim Collins, superior results are the product of asking exactly what it is you have to offer.

interview by Bennett Voyles PURPOSE PURPOSE

he value of institutional purpose is Purpose tends to be found fairly early. Back in a relatively new discovery for many the 1970s at Apple, for instance, Steve Jobs was ­organizations, but not for celebrated able to articulate the idea of "hey, what this is­ ­author Jim Collins. For the writer of really about is building bicycles for the mind. Our T such influential business books as the ­purpose is to think about the world and say: 'What groundbreaking Built to Last: Successful Habits of will change the world more – making one ­computer Visionary Companies (co-authored with ­Stanford a thousand times larger, or making a smaller ­professor Jerry Porras), and Good to Great: Why ­computer and putting it in the hands of a thousand Some Companies Make the Leap ... and Others Don't, creative people and letting it bloom?'" one essential quality that important and enduring A good purpose sticks: When Jobs came back companies share is having a sense of meaning that to Apple in 1997, one of the first things he did was goes ­beyond simply keeping their stockholders find the people who still shared that ideal. It was sharpen happy. In a telephone interview from his home in still there, in the woodwork. your focus ­Colorado, he talked to Think:Act about his ­evolving ugust a

Jim Collins / view of ­purpose and what it means. What if you've never had a clear purpose? ­believes that the That's much harder. In that case, you have to ask: key to enduring How important is purpose if you want to build a "Why is the work important in the world?" Then you success lies in great ­organization? understanding start working backwards: "Why is it important that how you can be One of the key qualities of an ­enduring company we make semiconductors?" And you begin to most useful. is that the founders instilled a sense of being there ­unlayer those reasons. If you're actually doing

photo: martin schoeller martin photo: to serve a purpose that's larger than any of us. something effective, there will be a reason 32 Think:Act 25 Jim Collins 33

you can put your finger on. But it's a lot harder to you run out of purpose. But if your purpose is to do Why do you think that was the case? find if you didn't instill it from the beginning. amazing things or create things, you'll never run A lot of it came down to their sense of purpose. Ask "Purpose can't be a But purposes don't look alike. If you look at out of purpose because you're never done. the Stanford MBAs: "What cause do you serve? the examples of purpose listed in Built to Last and When you study the people who built lasting, What are you doing that you might be willing to bolt-on. It can't be ­compare Nike's to ­Disney's, 3M's, Patagonia's or iconic and visionary companies, the drive that they suffer and sacrifice for? Why are you here?" Very Pacific ­Theaters', you'll find that they're really had was an inner compulsion. It had nothing to do few of them would have an answer. At West Point, ­different flavors. Some are really competitive, some with their circumstance. It's like trying to imagine you get an answer. The sense of service is there something that you are really creative, some are really built around Beethoven after the success of the Fifth and Sixth from the get-go. ­social change and some have to do with serving the Symphony saying, "I have too much cash. I think I'll There were a couple of other things. Ask West do to feel good. It ­people who work for you. If your purpose really is skip writing the Seventh or Ninth and take it easy Point cadets: "How many of you have experienced just "we love to win," that's okay. If your purpose is now." He couldn't help himself. failure and inadequacy here?" They will all raise has to grow from "we just love to create things," that's okay. If your their hands because the system is designed to purpose is "I really want my people to flourish," So pay doesn't matter? make sure you struggle and fail. You learn that the that's okay. What matters is if it is authentic. An You can't turn the wrong people into the right only way you really do well is to help each other. At the actual work." ­inauthentic purpose is worse than having no ­people with incentives. If you have the right ­people, West Point, the opposite of success is not failure, ­purpose. Even if it's a commendable idea, purpose they're going to try to do the right things, and if but growth. And success is always communal – you can't be a bolt-on. It can't be something that you you have the wrong people, it doesn't matter. Great only succeed by helping each other succeed. What do to feel good. It has to grow from the actual work. vision without great people is irrelevant. could be a happier situation? You should be very careful with incentives. The before I finally succeeded. Part of climbing was to In Built to Last, you quote the historian Barbara ­economic evidence is clear: Incentives will affect The great companies you've written about often did learn how to go through that process and to Tuchman on the tendency of "affluence to smother behavior. If you have incentives that drive you most of their work in-house – you've written that ­eventually accomplish the goal. motive." Do today's cash-rich companies face any ­towards undisciplined growth, you're going to get Disney didn't even outsource parking. Can strong Now climbing is about enjoying a great time special risks? undisciplined growth. organizations still be built today in our world of with great partners. Whereas I used to ask myself Interestingly, great companies don't usually fail ­extended supply chains? what climb I wanted to go do, now I ask who I want ­because they become complacent, but because Discipline, on the other hand … ? The nature of supply chains today clearly means to do the climb with. The climb becomes ­almost they pursue undisciplined growth – growth that One of the real differentiators of companies that that there's going to be a lot of moving parts, just a canvas for enjoying a marvelous shared day doesn't fit with the purpose of the company, that endure at a really high level is that they're even ­including outsourced parts. Maybe it's like being of adventure, comradeship and friendship, of PURPOSE PURPOSE doesn't fit with why it could be best in the world, more disciplined in good times than in bad times, allied forces – we're all coming from ­different Jim Collins watching out for each other and having a great that is just fueled by big acquisitions. The hubris because it's what you do before the storm comes countries that need to stay relatively unified in ­conversation on a ­belay ledge a thousand feet peak born of success leads to what we call the undisci- that most determines how you will do when the ­pursuit of an overall mission. A former Stanford above the ground while the birds fly by and then ­performance plined pursuit of more. storm arrives. You don't grow too fast. You put My mentor Peter Drucker made an ­interesting Graduate School summiting the climb. In almost every aspect of life, For Collins This is why having a purpose and a drive far ­reserves away for when the bad things come. You observation that was profoundly right for the of Business I keep coming back to the idea that the who is (seen here with ­beyond the purpose of making money is so impor­ don't compromise on the quality of people you 20th century: The alternative to tyranny was well-­ professor,­ Jim ­ultimately more important than the what. The American climber tant. Because if your purpose really is just to make hire. You don't get sloppy around the edges managed organizations, widely distributed.­ With­ ­Collins founded his climb doesn't care if you get up it. Your friends care, own ­"management Tommy Caldwell), a lot of money, then when you have a lot of money, ­because you can. Then, when the storms finally out them, tyranny wins. Today, I believe we might and you care about your friends. rock climbing ­laboratory" in come, you are the one that pulls ahead. be on the cusp of a shift. If the 20th century was I've also been thinking a lot about what I want illustrates how st ­ Boulder, Colorado we can persist about organizations well managed, the 21 century in 1995 and has my life's work to be. I have a picture of all of Peter through failure Several years ago, you served an appointment on might well be about networks well led. authored or co­ Drucker's books from a shelf at the Drucker and discover what leadership at the United States Military Academy authored six books ­Institute set up in chronological order. At my age, is most important. at West Point. Did that change any of your thinking You've always advocated the pursuit of what you that delve into what Peter was only about 25% of the way through his about discipline or purpose? call the BHAG (Big Hairy Audacious Goal). Now makes companies life's work. I've been doing a lot of thinking about Let me ask you: Which is a harder life? Being a that you've just turned 60, do you find that your great. He was how to make good on that idea, not just the West Point ­cadet, where you have four years of sense of purpose has changed? named as one of the ­numbers, but finding an overarching theme. If you ­academic ­burdens, physical burdens, leadership Yes, and I think rock climbing might be a good 100 Greatest Living look at Peter's shelf and you were to ask yourself burdens, military training burdens and at the end ­illustration of how. Rock climbing has always been Business Minds by what the overarching question is, I think manage- you are also signed up for a minimum five years of a central theme in my life, this unifying theme of Forbes in 2017. ment was a sub-point. The deeper question is:

service and you're ­going to be charged with respon- .coreyrich.com growth and adventure and the pursuit of big hairy "How do we make society both more productive and sibility for people's lives and the accomplishment audacious goals, but my sense of the purpose of more humane?" That's a beautiful, marvelous www

/ of ­missions? Or ­being a ­Stanford MBA student climbing has changed over the years – or maybe question that runs through the 30-odd books like hanging out in ­Silicon ­Valley ready to go do a I've uncovered a deeper purpose. When I was a common thread. A lot of what I've been thinking ­startup? Yet my West Point cadets struck me as a younger, climbing was really about how to persist about is that I've been really fortunate to create a ­happier bunch than my ­Stanford MBA students by through cumulative failure. One route took me five body of work up to this point, but how can I tie it

a ­sizeable ­delta. rich corey photo: years to do 25 moves. I ­basically failed for five years all ­together? What would my question be? ■ 34 Think:Act 25 Acting with Pur pose Acting with Pur pose Think:Act 25 35

Cleaning up business In 2015, the UN launched its sustainable development goals program to end poverty, protect the planet and ensure prosperity for

PURPOSE all. The goals are a clear signal and PURPOSE a call to action for business.

photos by Kadir van Lohuizen

The UN's sustainable ­development goals (SDG) program explicitly calls on businesses to help solve the world's environmental ­challenges by 2030 by integrating change, innovation and creativity into their practices and initiatives. The ­manifesto encourages companies – ­and especially the large and transnational ones – "to adopt sustainable practices and to­ ­integrate sustainability LAGOS LANDFILL information into their reporting cycle." Waste management is a global issue with → scavenging for plastic local impact and substantially reducing waste Located in ­Lagos, Nigeria, the generation through prevention, reduction, Olusosun landfill is­A frica's recycling and reuse is a core concern of the ­largest. ­Approximately 1,000 ­scavengers live on-site, ­sorting UN goals aimed at reducing the adverse per through the waste for scrap capita environmental impact of cities. These materials that can be sold on. images set out the impact of waste: Can business help solve issues like these by 2030? 36 Think:Act 25 Acting with Pur pose Acting with Pur pose Think:Act 25 37

URBAN PRESSURE

→ a measured difference Rush hour in Tokyo r­ eveals a population density that produces less waste than New York City (NYC) – 12 ­million as opposed to 33 ­million tons. Households separate their waste to ­reduce landfill demands. PURPOSE PURPOSE

PLASTIC REUSED

→ reducing landfill Tokyo only has one ­­landfill site, but it has 48 incinerators and a well-organized r­ ecycling ­program. Other Japanese cities like Tochigi make big efforts to ­recycle plastic bottles as well. 38 Think:Act 25 Acting with Pur pose Acting with Pur pose Think:Act 25 39 PURPOSE PURPOSE

COMPACT CARS

→ metal makes money In the Netherlands, most of Amsterdam's waste is ­inciner­ ated. Metals are saved for further use. Scrapped cars are compacted into cubes – about 750,000 tons per year – and then reused or exported. 40 Think:Act 25 Acting with Pur pose Acting with Pur pose Think:Act 25 41 PURPOSE PURPOSE FLOW OF ENERGY

→ trash transformation The Covanta Delaware ­Valley resource ­recovery ­facility ­incinerates 1.2 ­million tons of NYC's waste annuall­ y, ­converting the ­energy from the heat into electricity­ via steam from water-cooling installations.

WASTE OPPORTUNITY

→ nyc is no.1 producer It has a population of 20 million­ and is the world's ­biggest ­producer of waste – 33 million­ tons per year. This "­canner" makes about $20 a day ­picking up cans for the 5¢ ­deposit each carries, although the ­practice is not strictly legal. 42 Think:Act 25 Faith matters Think:Act 25 43

Praying to God alone is unlikely to change the fortunes of your business, but the sense of purpose and other values embedded in various religions can be a dynamic, if not a spiritual, force for good – and they may even provide a competitive advantage.

by Detlef Gürtler illustrations by Olaf Hajek

hen the Japanese economy outshone The oldest capitalistic region in the world, England, the rest of the world in the late 1980s, is predominantly Protestant; in some countries, an almost heretical thought was such as Switzerland or France, the ­Protestants were PURPOSE PURPOSE ­muttered throughout the (Christian) especially thrifty and attracted to business; and the WWest: Could it possibly be that the economic rise of the United States of America was Japanese religion, Shintoism, was a reason for the driven for the most part by Protestant immigrants country's economic superiority? Not that ­European from Europe. or US managers would ever want to build a shrine But correlation does not necessarily mean for their company god or make their whole work- causation. In 2015, 111 years after Weber, another force worship every morning, but if religion ­really German economist named Ludger Wößmann were a key element in Japan's success, the ­country's found compelling evidence for an underlying effect ­economic dominance would be here to stay. that caused the Protestant "economic miracle": Whatever part Shintoism played in Japan's ­education. The ­belief that every Christian should business boom – or didn't, as the case may be – it be able to read the Bible for ­himself led to an is still worth posing the question: Does religion ­education boom and improved literacy across all ­matter? One of the hottest debates regarding the Protestant regions. Martin Luther even ­significance of religion for economic development was started in 1904 by Max Weber. The German ­sociologist argued that the Protestant work ethic was an important factor for the birth of capitalism "Work is like a in Northern Europe. The Calvinist branch of prayer, investment ­Protestantism in particular believes that ­individual economic success on Earth is blessed by God. is like worship – Work is like a prayer, investment is like worship – Faith and that's the mindset that kick-started capitalism. and that's the Weber's thesis that religion matters became one of the most influential (and most quoted) mindset that kick- matters ­papers in social sciences and has been heavily ­discussed ever since. Indeed there's a correlation: started capitalism." 44 Think:Act 25 Faith matters Faith matters Think:Act 25 45

­favored schools for girls – an incredibly progressive This picture can look very different if you­f ocus ­religions," says the German ­anthropologist Dieter idea for 16th-century ­Europe. This pro-education on a specific region instead of the whole world. In Haller. He sees it as a feature of religions that bias became a competitive ­advantage: The data the US at the start of the 21st century, for example, Religious attitudes and economic values ­define themselves as approaching an ideal or Wößmann analyzed from 19th-century Prussia the world religion with the highest ­quota of college ­paradise, like Islam or Christianity: "This kind of showed a much higher level of education in graduates were Hindus: 67% had gotten (at least) teleologic or goal-driven thinking is dynamizing ­Protestant than in Catholic regions. In addition, a ­college degree. They were followed by Jews, In a study for the US National ­people's attitudes. One example moral behavior and economic action. But you get the Protestants had higher incomes and were more ­Muslims and Buddhists, all of them still above the Bureau of Economic Research, is their attitude to­ wards private completely different dynamics if a ­religion, like the economists Luigi Guiso, ownership. Observant Catholics likely to work in modern sectors of the Prussian US average of 33%. Far below average were the Buddhism, does not strive for an ­ideal, but sees life Paola Sapienza and Luigi support ­private ownership twice economy, such as commerce. ­college degree quotas of Christian niche beliefs as an alienation from this ideal." So the difference Zingales looked at the relation as much as Protestants, while Another example for the long-term economic such as Baptists or Jehovah's Witnesses. With between religious attitudes Muslims and Hindus tend to be between "paradise" and "ni­ rvana" is more than just effects of education can be studied in ­Judaism, ­education as an early indicator for economic and social and economic values. strongly against competition. religious: A Buddhist ­conqueror would fight his which enforced a religious norm ­requiring ­fathers trends, a shift of economic success is predictable: They found that, on average, battles not for his ­religion, but in spite of it. to ­educate their sons from the end of the 2 nd from predominantly Christian countries to regions religious beliefs are associated Finally, with the exception of ­century AD. Economists Maristella Botticini and with a high number of Buddhists and Hindus. with "good" economic attitudes, Buddhists, religious people of all In business, religion can also be a dynamizing Zvi ­Eckstein are convinced that this had a major In history, though, religion has not always where "good" is defined as ­denominations are more inclined factor. There are a lot of entrepreneurs who ­influence on Jewish ­economic and ­demographic ­settled for peaceful competition. There are well- conducive to higher per capita to believe that poor people are ­identify themselves with a religion – from the ­history in the first millennium: "The Jewish known episodes showing a strong combination of income and growth. Religious lazy and lack willpower. The ­Catholic Brenninkmejier family running the C&A ­farmers who invested in ­education gained the religion and success – namely ­military. The ­Muslim people trust others, the gov- effect is stronger for Protestants retail chain to Islamic banking or real estate agents ernment and the legal system than Catholics. Overall, the study ­comparative ­advantage and incentive to enter expansion all around the Mediterranean from the with links to Scientology. As with military success more, are less willing to break found that Christian religions are skilled ­occupations during the urbanization in the 7th to 9th century AD was ­mainly driven by religious ­stories, business cases linked to a religious ­attitude the law, and are more likely to more positiv­ ely associated with Abbasid ­empire in the Near East and they did ­select zeal, just like the ­crusades of the Middle Ages or believe that markets' outcomes attitudes conduciv­ e to economic often take place in an early stage of expansion: The th themselves into these ­occupations." And as the conquests of South America in the 16 ­century: are fair. The team's research growth, while religious Muslims unifying effect of one strong belief can lead to a ­merchants the Jews invested even more in The Holy Cross of Santiago promised victory (not also showed that different reli- turned out to have the most more coherent, focused, motivated workforce and ­education – ­literacy and numeracy are the key to mention gold) to the Spanish adventurers. gions have different effects on ­anti-market attitude. can be a decisive factor in beating the ­competition ­preconditions for ­building up trading networks. "The ­expansionary element is not typical for all as the company represents more than just an ­opportunity to earn money. If the decisive factor for the economic success Devdutt Pattanaik, an Indian leadership expert PURPOSE PURPOSE of believers is not the belief itself, but the appetite and former "Chief Belief Officer" of a large Indian for education, the trophy for the most ­economically retail chain, even calls for a mythologization of successful religion can change hands. A 2016 study companies. For him, a mythology is something by Pew Research Center on religion and education that "tells people how they should see the world" – around the world saw Judaism in a strong lead something a company with a strong mission can (with more than 13 years of schooling on average) offer its employees. "When institutional beliefs followed by Christians (nine years), Buddhists and individual beliefs are congruent, ­harmony is (eight years) and Muslims and Hindus (both with the resultant corporate climate," ­Pattanaik says. less than six years). In the younger ­generation, He doesn't recommend the leaders to brainwash however, ­Buddhists have reached ­almost the same their staff, however. Quite the contrary: "When schooling level as Christians. people are treated like switches in a circuit board, that's when disharmony descends." There is a thin line between harmony and ­polarization whenever religion enters into secular "A shift of economic ­affairs. What looks like heaven on earth when the success is predictable: ­beliefs of the workforce are homogenous can turn into a hell of a nightmare as soon as ­employees from predominantly and/or management belong to different religions. This increase in diversity will definitely happen Christian countries when a company starts to grow beyond the ­cultural sphere of its origin – and then it's too late to take to regions with a high religion, faith and/or mythology out of a ­company's DNA. So even if religion can be a driver of growth number of Buddhists for smaller companies, it will be more like a limit of growth for bigger ones. Keeping the faith isn't and Hindus." as simple as it sounds. ■ 46 Think:Act 25 Jaipur Rugs Jaipur Rugs Think:Act 25 47

Dream weavers The sandy storybook landscape of the Indian state of Rajasthan has become the backdrop for a forward- thinking new business model. For Nand Kishore Chaudhary and his PURPOSE company, Jaipur Rugs, the reason PURPOSE behind its global success is simple: Stay focused on your purpose and rewards will follow.

by Kunal Talgeri photos by Florian Lang

tools of the trade Jaipur Rugs delivers yarn and other raw materials directly to artisans in nearly 600 villages across rural India. The company calls its model "doorstep entrepreneurship." 48 Think:Act 25 Jaipur Rugs Jaipur Rugs Think:Act 25 49

out of her wages. Like other weavers in Manpura, she had to borrow money to buy the yarn to make a common thread carpets and depended on go-betweens to find Once ­struggling herself, Shanti (left) now oversees more than six ­customers. She was rarely paid fairly for her work, looms and the 25 weavers that making less than $ 8 a month – hardly enough to she can employ at a fair wage feed a family. When one contractor didn't pay her thanks to Jaipur Rugs' practices. for two carpets, she was forced to work as a ­manual "She is ­laborer, breaking stones and carrying mud to the family ­construction sites in the desert heat. today, the mother of six's fortune has changed bread- beyond recognition. She is the family ­breadwinner, earning more than $ 75 a month. She now hosts winner, more than six looms and employs 25 weavers who land of heat and dust. It's a ­work at her house from 9 a.m. to 6 p.m. weaving lazy cliché sometimes used to earning award-winning carpets that sell across the world in paint an unimaginative picture the US, Europe and Turkey. The agent of change in of the ­sprawling ­diversity of more than Shanti's life – and the lives of a ­staggering 39,000 A ­India. But in ­Manpura, a village $75 a other Indian artisans – is principled ­entrepreneur in the northwestern state of Rajasthan, "heat and Nand Kishore Chaudhary and Jaipur Rugs, his dust" ­perfectly describe the scene. Here, in one of $23-million company. Ignoring the social norms the hottest subtropical desert regions on Earth, month." that paid them little dignity or respect, he made sand is a permanent fixture – and today the tem- the "untouchables" a key component of his busi- perature is getting close to oppressive. It's only the ness – as they remain today. "We continue to plan beginning of summer and the thermometer is for how to make the weavers' lives easier, ­ensure ­already north of 37 degrees Celsius and rising. Two that they earn more, develop their capabilities and camels lollop along the sandy track, ­slowly improve the supply chain," he says. "In the future, PURPOSE PURPOSE ­dragging cartloads of villagers behind them. But they will remain the core of our business. So to be this lazy and languid impression is ­deceptive: competitive and efficient as a company, we have to There are lots of busy hands at work ­under the focus on continuously developing them." ­veranda of one of the houses here in Manpura. At Shanti's home, the heat is no excuse to slow down or take a break. The gritty 36-year-old is hard at work at the loom, doing what she has done for almost 20 years: weaving. Her home is her factory and as she fiddles with a length of yarn, she shouts out instructions the perfect print across the room to the six other women weavers The patterns for the working for her. That she has reached a position of carpets are created financial independence and responsibility is no 39 using computer-­ mean feat. Shanti comes from India's weaver com- thousand aided design (CAD) munity, people ­oftenin the lowest ­income bracket The number of at the company's ­headquarters in Jaipur. and ­frequently from the most oppressed societal Indian artisans group dubbed the "untouchables" in the exploit- across nearly ative and antiquated caste system that is still in 600 villages now place in many parts of India. Her rise to the top has connected through as much to do with a ­forward-thinking business Jaipur Rugs' idea as it does to her own hard graft and diligence. network. Shanti learned to weave at the age of 13 and, in keeping with the social norms of the region, was soon married off. She had her first child less than three years later. Life at the loom soon became a struggle made worse by middlemen cheating her 50 Think:Act 25 Jaipur Rugs Jaipur Rugs Think:Act 25 51

woven into the fabric Fortune at the Bottom of the Pyramid: ­Eradicating ­Whatever the design, each Jaipur Poverty Through Profits. Prahalad said the ­company Rugs product represents a fusion ­"focused on developing human capability and skills of contemporary approaches to at the grassroots level, providing steady incomes social change and traditional hand-knotted artistry. for rural men and women in the most depressed Nand parts of India and connecting them with markets of the rich." It is a source of pride for Chaudhary Kishore to be recognized. "It makes me happy that what I Chaudhary have managed to do in an organic way has become Chaudhary's vision on how to succeed in a a benchmark." And other business academics have business embedded with purpose was simple: Put Nand Kishore also taken notice. "The weavers have developed the people at the heart of it. "Our job," he says Chaudhary founded a sense of financial security and self-reliance," humbly, "is to merely link the weavers to the ­global the business that ­professors Kaushik Roy of the Indian Institute of customers." Chaudhary enforced global standards would become Management (IIM) ­Calcutta and Amit Karna of IIM on his products and processes right from the start. Jaipur Rugs in 1978. Ahmedabad wrote in their 2015 paper Doing Social Had he not, he simply wouldn't have had any buy- His innovative Good on a Sustainable ­Basis: Competitive Advantage ers. He ensured that Jaipur Rugs ­adopted healthy approach to the of Social Businesses, pointing out that Jaipur Rugs labor practices in the supply chain to differentiate carpet industry has effectively eliminated the ­middlemen by directly earned him multiple it from the carpets business run by contractors and procuring the carpets from weavers who had ­accolades including to earn the weavers' trust. And with more than 95% ­previously faced exploitation. the India Pride of its revenue coming from exports, Jaipur Rugs Award 2011. demonstrates companies can do social good with- Vital to his success, chaudhary insists, has been out sacrificing growth or profitability. "This is treating weavers like family and making them about [building] ­human-to-human relationships," stakeholders – they want the ­company to succeed Chaudhary explains. "Focusing solely on business as much as he does. ­Before ­Jaipur Rugs was incor- growth is a wrong concept. Growth should happen porated in the 1990s, he spent eight years in inside people – the people in your company. How ­Gujarat mobilizing 15,000 tribal artisans to take up PURPOSE PURPOSE much are they learning? How much is a business weaving. That helped him understand the needs of developing their leadership and capabilities? That ­opportunities apart from seasonal agriculture. weavers and their families, which then spurred on is the only growth a business can sustain." ­After receiving careful training, they weave the yarn another step in the evolvution of a new leadership 95 % that ­arrives on their doorsteps into world-class path for his ­"family": the Jaipur Rugs Foundation Embracing his weavers as independent artisans and more of ­Jaipur ­carpets retailing at top outlets like Home ­Depot (JRF). The JRF builds on the socially progressive ­rather than as employees, Chaudhary pioneered Rugs' revenue and Crate and Barrel. work embedded in the business. Shanti's six a ­model he calls "doorstep entrepreneurship" comes­ from exports, A small-town boy himself, Chaudhary had no ­children are now learning English and math as a clear ­illustration when he began his business in 1978: Jaipur Rugs real ­exposure to management best ­practices. So he part of the JRF's education scheme and her hus- of the company's delivers the yarn and other raw material to rural hit the books and over the years he taught himself band has enrolled in a skill development program global mindset. ­artisans who can't ­travel for work – some haven't key management concepts like Six Sigma and Zero as well. JRF has also ensured artisan certification even traveled outside their villages, places scat- Defects and then he implemented them in the for more than 5,000 weavers who will get "artisan tered across the country with no real livelihood ­company. "If we had to sustain business for the cards," which is a positive step in bringing legiti- ­customers and serve them," he ­explains, "I realized macy to a sector like weaving. But as Shanti insists, we have to fulfill those three ­parameters: zero speaking in her broad Rajasthani Hindi ­dialect, the ­defect, zero wastage, on-time ­delivery." "This is about [building] His model has captivated ­business thinkers and commentators not just ­because of its profit- human-to-human ability, but also because of its approach to putting people first and building a world-class business the ties that bind Nand Kishore ­Chaudhary around a disorganized ­community of artisans. relationships. Focusing attributes his sucess to treating Chaudhary has been invited to address Ivy League his weavers like family and solely on business growth institutes such as Harvard and Wharton, but the focusing on their growth as accolades and attention of business guru C. K. much as his company's. is a wrong concept." ­Prahalad speak volumes for the success and struc- ture of the model: Jaipur Rugs was featured in the Nand Kishore Chaudhary, Founder and CEO of Jaipur Rugs 5th anniversary edition of his ­celebrated book The 52 Think:Act 25 Jaipur Rugs GIST OF … 53 PURPOSE

most crucial difference the company has made to ­positive new business model that has purpose and ­weavers like her is this: "We get full payment – the social improvement at its core. He is almost evan- money that is rightfully ours. There is ­transparency. gelical about the purpose of business: "I feel the That helps us." For her, the bottom line is that she ­social issues [in India] can be resolved only has a reliable and fair source of income. through business. There is no other way for orga- nizations or government to redress these issues. The bottom line for Jaipur Rugs is similarly The capabilities required to solve these issues are ­rewarding. Having built a capacity of 6,685 looms available to a businessman. If we create jobs, then in 576 villages, its operating profits soared by 35% the issues of clothing and housing also get solved." between the 2013 and 2016 fiscal years. That was But that doesn't mean business at all costs or For me, an impressive $2.65 million in 2016 – up from less unbridled growth. Chaudhary says that as the busi- than half a million in 2013. "Our villages have the ness grows, there is a danger of distancing the core talent and a range of ­capabilities," Chaudhary says. weaver base. "That's where the business starts what's really happened is "To harness that, ­India must develop its own 35% ­dying." He maintains that keeping an eye on what ­models." So, as Jaipur Rugs expanded its reach to The growth matters and bringing about positive change are 576 villages, it did not invest in office space for in Jaipur Rugs' also aspects of the purpose of business. "Purpose weavers and looms. Instead, it variabilized capital operating profits is the only thing that is important because without that in almost expenditure by empowering branch managers to between the fiscal that a business will ultimately lose its way. ­Purpose," every years of 2013 and find weavers who could host looms in their­houses. he emphasizes, "is everything." And as the busi- 2016. In 2016, the The house owners are compensated for hosting ness becomes bigger "it becomes about keeping its company recorded looms. "While this appears to be a logistical chal- an impressive soul alive," he adds with a kind of steady certainty. aspect of life, lenge and complex at first, how else will we tap into $2.65 million. For Jaipur Rugs, that soul is the weaver ­community, the artisans' creativity?" he says. and it's a soul that sings. As the weavers' ­fingers Besides progressive work done in ­recognizing knot the threads at the loom, they raise their ­voices I keep coming back artisan skill and lifting people like Shanti out of in song. And in the heat and dust, Shanti keeps an poverty, Chaudhary's maverick attitude to business eagle eye on quality, overseeing the weaving of a growth also plays a part in helping to sustain a carpet that could change all their fortunes. ■ PURPOSE to the idea that the Going far: German Design Award winner Bimla Devi is Bimla Devi is a weaver from When I'm at the loom, I just My family was worried about my path. I do work in other who Aaspura village in Rajasthan want to weave and weave and me going because it involved villages to bring more weavers who has worked with Jaipur weave. The big change with traveling so far away and I had into the system and share my Rugs for a decade. Her carpet working for Jaipur Rugs is that never traveled outside Aaspura. ­experiences with them. ultimately more design won the German Design we have an equal opportunity, Award 2018 and she went to regardless of our gender and I had never seen so many seats Before I went to Frankfurt, Frankfurt ­to receive it. caste. I am in a position where I for people in just one vehicle many women came to my This is her story. can take care of my family and before I got on that plane! In home, ­worried, and kept asking than the my children – aged 12 and 13 – Frankfurt there were so many important me how I would manage in a can now go to school. shops and I was surprised that country so far away. But when people pay even for water. I I returned they were proud that It took me two days to decide found that unusual. And then I somebody from our little village on the design for the rug noticed that alcohol was more of Aaspura had gone so far. I that won this award and the easily available than water! had never been to another city image I came up with was of in Rajasthan, let alone in India pr

/ a shak­ arpara, a local snack. It felt good for our work to be or to Europe! Now when I see what." That's what I imagined. I found appreciated and when I came Mr. Chaudhary after winning out I had won the award in back from Frankfurt e­ very the award, I tell him about my November last year when the family from the village came to aspirations to work with the JIM COLLINS branch manager told me that ask me about my ­experience. main design team in Jaipur Author of Built To Last and Good To Great

I needed to get a passport. Others now want to follow with CAD! photo: jaipur rugs → read the full story on page 30 54 Quantum Computing Think:Act 25 55

Wide angle Quantum

Read on for diverse insights into the wider world of business leap and ideas. With IT giants, governments and startups all investing in quantum technology, are we standing at the dawn of the next computer revolution?

by Janet Anderson

lose to absolute zero, like being in ­outer The cause of current excitement is the potential of space: That's how cold it is ­inside the quantum computers to become more powerful than ­cylinder, a dark vacuum that holds the established computers for the first time. The advent ­information units that form the building of such computing power could lead to being able to blocks of quantum computing: qubits. If complete highly complicated calculations that were controlled environment Cthat sounds like the future, that's ­because it is. This previously impossible. The new breed of computers is To maintain their delicate new breed of computers will open up possibilities that able to do this by using superposition and entangle- quantum nature, qubits are ­beyond our grasp today. ment to achieve exponential power: If one qubit can are kept in vacuum at the Quantum computing is based on the peculiar be in two states, two qubits can be in up to four states, bottom of the cylinder principles of quantum mechanics, which not only three qubits in eight states and so on. By the time you where the temperature is close to absolute zero. ­allow a particle to exist simultaneously in two states reach 250 interacting qubits, this would provide the at once – known as "superposition" – but also for two equivalent computing power of 1080 classical bits – particles at a distance to instantaneously influence more bits of information than there are atoms in the each other – known as "entanglement." Einstein ­may universe. These mindboggling numbers show the have described the idea as "spooky," but these princi- ­potential involved. Progress in ­recent years has ples are now being exploited to take computing to getty images getty / the next level. According to Anthony Annunziata, ­the associate director of IBM Q, quantum computers ­harness laws of nature that are always there but usu- ally remain hidden from view. "By doing so, they are able to process information more holistically," he says. IBM Q is a network of companies, startups and ­academic institutions with a shared mission to bring quantum out of the lab and into the world. Over the past few years, scientists have succeeded in building

trunk archive; science photo library archive; science photo trunk a scalable platform

/ and running ever more powerful machines to create

and manipulate ­qubits. The machines may still look A microtrap makes use of ­electromagnetic like sci-fi fantasy, but with IBM, Microsoft, Intel, the right signals fields to keep charged Microwaves are used to ­Google, Alibaba, Baidu and others pouring billions of atomic ­particles in a manipulate qubits, the dollars into research to develop robust systems with confined space. The qubits basic units of information real-life applications, they are on their way to becom- they store can then be

in a quantum computer. spencer lowell photos: ing part of a present-day, commercial reality. manipulated by lasers. 56 Think:Act 25 Quantum Computing Quantum Computing Think:Act 25 57

Another challenge is the short coherence time of qubits, meaning the time a qubit is able to process a request before collapsing out of superposition. IBM says that the coherence times of their qubits lead the field with an average 90 microseconds. This might not sound like very long, but it is already enough to carry out computations. Nevertheless, there is room for ­improvement. "In order to use a quantum computer to solve the problems we're interested in, the qubits have to be protected from noise, and the effect of ­errors inherent in their operation must be suppressed," explains ­Annunziata. "Can we achieve these goals open for testing without incurring large overheads such as those IBM made its ­required for fault-tolerant quantum computation? 16 qubit proces- These are the central challenges." sor available at no cost over Many of the leading companies working on these the IBM Cloud challenges are technology giants like IBM. ­Microsoft in May 2017. has been working on developing a programming lan- 1.5 million quan- guage for quantum computing. Google is working tum experiments have been run so with NASA on applying quantum computing to artifi- far by students, cial intelligence and machine learning. In China, the researchers and search company Baidu has invested $10 billion in a enthusiasts. ­research center. One of the first quantum computers to be available for real-world applications was the D-Wave, created by a company in ­Vancouver, Canada. molecular and chemical interactions. This in turn There are now growing numbers of startups, too. One would enable us to discover new medicines without of these is Rigetti Computing in California, which the need for costly and risky real-life testing, new ­offers general-purpose cloud-based quantum comput- ­materials with useful properties to tackle urgent chal- ers and a full-stack software development toolkit. lenges such as climate change and new ways of pro- The Chinese government is showing particular ducing enough food for the world's growing popula- ­interest in the emerging field of quantum cryptogra- tion. Any business that relies on big data analysis or phy, which is drawing attention from security experts hopes to exploit ­machine learning could benefit. around the world. The challenge – or threat – is that Quantum computing has reached an inflection quantum computers will be fast enough to crack point, according to IBM's Annunziata. "Modest-sized, ­encryption codes. This worry has spurred on reaching the real world IBM Q team member approximate quantum computers now exist in the real Katie Pooley examines a cryostat containing a new world and the next generation of these devices may be ­prototype for a commercial quantum processor. too big to simulate on a classical computer. A quan- tum computer which is too big to classically simulate has an inherent computational advantage of sorts," he "For many years quantum been rapid – we have moved on from machines with combinations of outcomes is well-suited to quantum says. The "quantum advantage" – the point where a five qubits to 20, 50 and, most ­recently, Google computing. Industries ranging from logistics to phar- quantum computer can perform a practical function computing was just ­announced a general-purpose machine with 72 qubits. maceuticals, finance and energy supply face these that surpasses the capability of a classical computer – The motivation driving this progress is that there kinds of problem. Because qubits can be in multiple is what IBM is seeking to achieve. To do so will require an academic exercise – are some kinds of problems that classical computers, states simultaneously, they can be used to check mul- a machine with more qubits than the current ­machines no matter how large, cannot solve or would take far tiple options at the same time. Classical computers – somewhere between 50 and 100 qubits or more. One many even doubted ibm; ibm research

too long to solve. For example, how many different have to do the job sequentially, often taking far too / long-standing obstacle is "noise," meaning anything

ways can you seat 10 people around a table? When you long to be of practical use. that can interfere with the qubit's stability. That is why realize that there are 3.6 million possibilities for just With Moore's Law – the prediction that ­computers they have to be kept at near absolute zero and isolat- it would ever work." 10 people and that the number of possibilities grows will become smaller and faster over time – beginning ed from all vibrations. Any disturbance can cause the exponentially as more people are added, you see the to run out of steam, the hope is that quantum systems qubits to "decohere," or collapse out of superposition Doug Finke,

challenge. Any problem with many different possible can step in and help us understand the complexity of photos: andy aaron and stop working, causing errors in the calculations. Managing editor of The Quantum Computing Report 58 Think:Act 25 Quantum Computing Quantum Computing Think:Act 25 59

­research into quantum-resistant cryptography to the EU flagship program, yet it is furthest in terms of ­enable hack-proof communications via a quantum application. "Muquans, a French startup, has devel- ­internet. In China, dedicated quantum communica- oped precision quantum sensors to measure ­absolute Calculating a computing revolution tion channels via optical fibers have been laid between gravity – the first commercial gravimeter of its kind. It Shanghai and Beijing and, alongside ­researchers in can be used in oil and gas exploration, for example, to Austria, they recently succeeded in ­using a satellite to search for cavities underground," he says. carry out the first quantum video communication. Quantum computing is not just a case of adapting classic approaches to a new system. Meanwhile the European Union has announced it The first really useful machines are clearly a few It requires a different way of thinking altogether, one that recalculates the building will invest approximately $1.2 billion over the next 10 years away – but how many years? "It's a very interest- blocks of computing based on the complex principles of quantum mechanics. years into research in quantum applications in the ing time because we are transitioning from research ­areas of computation, communication, simulation to the commercialization phase," says Doug Finke, and sensing. This last aspect is overlooked by many, managing editor of The Quantum Computing Report. What’s so special about a qubit? 0 1 0 0 1 1 0 according to Max Riedel, part of the team ­preparing "For many years quantum computing was just an Classical Superposition. While conventional ­academic exercise – many even doubted it would ever bit computing uses bits that work in binary work because of its fragility." Finke believes that code, 0s and 1s, ­qubits have the peculiar N ­within the next two years we will see a demonstration Either 0 or 1 One out of 2 possible permutations "We still need to do ability to be in two states at once – both of the technology on a commercially useful problem 0 and 1. This mirrors ­nature: The electrons that could not have been solved classically. Will quan- of a molecule are in a superposition of all Quantum a lot of engineering to tum one day replace classical computers? That seems possible states available to them. It is bit unlikely. "In order to provide the necessary shielding only when we observe or measure them make them robust, of light, heat, magnetic waves, electromechanical that they are in a particular location. Both 0 and 1 All out of 2N possible permutations emissions and anything else which might cause a ­qubit to collapse, quantum computers will always be Entanglement. The quantum state of cost-efficient devices. Measurement large and bulky," says Finke. individual particles cannot be described It's a young field ... " So we won't use quantum computers to send independently of the state of others, even Maximally 0 email or browse the web. They will be used behind the when the particles are separated by a large entangled pair 1 scenes. Will they upend business models? Finke distance. The particles instantaneously Measurement Max Riedel, Project manager of the European thinks it's unlikely. "But businesses in various sectors influence each other. Flagship Project on Quantum Technologies will want to leverage the technology to create new products and services or calculate better optimiza- tions in ways that were previously not possible," he Astronomical potential Quantum-powered Exponential growth says. Finke lists machine learning, computational chemistry, financial portfolio optimization and logis- How long would it take to work out 32 - which two prime numbers are possible states tics as some of the most promising applications. As 250 of qubits in qubits ­multiplied together to get a 2048 bit Riedel says: "We still need to do a lot of engineering to superposition

number, like those used in encryption? states make them ­robust, cost-efficient devices. It's a young 80 field – the first useful quantum algorithm was discov- = 10 16 - classical bits ered in 1994. Compared with the development of clas- sical computing, quantum computing is in the 1950s = more bits of 8 - or 1960s when the machines filled a whole room. But Classical Quantum computing computing 4 - the next phase of development will happen ­quickly." information­ than atoms 2 - number of qubits = = 1 - For many who have been involved in the field for _ _ _ _ _ in the universe a billion years 100 seconds 1 2 3 4 5 decades, their main worry is that expectations will be driven too high. "When the buzz dies down, people will see that it's a promising technology," says Riedel. "What we need now is to connect the people with the Real-world applications problems with the people with the solution." ■ Quantum computing is just stepping • a better understanding of how proteins into real-world use, where it could be misfold and lead to both Alzheimer's building expectations ­ used to help us develop: and Parkinson's It remains to be seen if • catalysts that enable carbon capture • new chemistry that could improve ­quantum machines like the and boost clean energy batteries used in e-mobility D-Wave system pictured here • new ways to produce artificial fertilizer • a room-temperature superconductor folded misfolded

will live up to the hype. systems d-wave photo: saidi sasan infographic: that outperform the current process that can transport energy without loss protein protein 60 Think:Act 25 Charles Handy Think:Act 25 61

THOUGHT LEADER Handy observations

Visionary thinker charles handy has always been ahead of the curve. Here, he shares his thoughts on the future of business and explains how we need to reinvent capitalism.

by Neelima Mahajan illustrations by Børge B. Bredenbekk

he currency of the future: Now in his 80s, his grandfather-like If it's ideas, then self-styled demeanor is at odds with the fact that Charles ­social philosopher Charles he's showing no signs of slowing down. Handy Handy should be a gazillion- His most recent book, The Second Curve, aire. He has a knack for tackles nothing less than how to rein- T­coining concepts ahead of their time. vent society and in this interview he The author of some His groundbreaking observations ­ shares some fresh observations about 20 books spanning over the last 40 years include the rise of today's organizations. As he talks he four decades and the initiator of the outsourcing, the "portfolio career" and smiles at the one thread that binds all Sloan ­Programme the "shamrock organization," which his work together: the important role at London Business uses the three leaves of the celtic ­symbol that human beings play in business. School, Charles to represent the three kinds of ­workers: "Organizations are full of human beings," Handy received the employees, contractors and temporary he explains," and I get worried when we Thinkers50 Lifetime workers. He's also a prolific ­writer. He forget that, when we call them human ­Achievement Award blasted into the management resources. What worries me at the in 2011. ­firmament in 1976 with Understanding ­moment is that we are trying to ­replace Organisations and has written some 20 human beings with digital technology books in the years since, ­including Gods because it's cheaper." It's a good start to of ­Management, The ­Elephant and the what will turn out to be a freewheeling Flea and The Age of ­Unreason. ­conversation with Think:Act. 62 Think:Act 25 Charles Handy Charles Handy Think:Act 25 63

Are businesses prepared for the brave something like that. Like becoming a In today's environment, do we need to new world of automation and techno- citizen of Britain: To do that, you have change the lens with which we view logical advances? to pass a little exam and you have to progress and growth? I don't think they are. Some are, of swear that you'll obey the laws and then We need to have a much wider focus of course – those are the new ­Silicon ­Valley there's a ­ceremony. I think we could do what progress is. I don't think growing fashionistas, the Ubers and so on. They the same. bigger is necessary if you want progress are effectively platform organizations Progress around what an organization is. The and don't have customers. They have But nowadays people seem to be less through the idea of "growing better" might be more users, instead. I believe organizations loyal­ to organizations. "second curve" interesting. Doing work that you are are ­beginning to think: "Why don't we Well, they will say that we don't feel proud of is ­terribly important. think of our employees not as human ­loyal to the organization because the 1 ­resources, but as users of our platform, ­organization doesn't offer us any­loyalty. In the 1970s and 1980s, you told us what and facilitate them to do their work?" Somebody's got to start the bargain, and Find your golden seed: the future looked like and we can see Now, how many organizations are think- I think it's the organization that has to Your organization that happening now. What can you tell ing like that? Very few. But I think more say: "If you become a citizen, we give or career may be at us about the next 50 years? and more will begin to think like that you certain privileges." We've got to its peak, but is there It's going to be difficult. We've got to because they'll see the idea that you ­recreate that kind of bond. something that has so keep control of the digital world, not let far been neglected? own these workers as if they were your it run away with us. One of the duties of "Making shareholders Now is the time to start family and you tell them what to do is This idea also calls for active participa- an organization is to give money to its growing those skills not going to work with the new kind of tion from the employees in key decisions. people so that they can ­actually buy rich is not really and preparing to make people that are coming up. You have to How does one maintain efficiency a transition. products from other organizations or give them the opportunity to be ­creative ­without risking this participation and from ourselves. When ­Henry Ford was and to do their best on your ­behalf – but a motivating purpose. slowing things down? 2 criticized for paying over the rate for his also for themselves. Thinking of them It's like the works councils they have in workers, he said: "But who else is going as users of your platform is another way Making society rich Germany. I was talking to somebody Don't leave it till to buy our cars if we don't give them the of doing it. You should not be surprised who started as a manager working for a too late: money?" One of the mechanisms of The key is to make to find these big organizations­sud ­denly German company and he said: "I have ­organizations has always been to pay is better." the jump before the ­becoming lots of little projects ­that are to appear before the works council ­every into the economy in some way. We've curve of your current connected through this platform: They year to explain what I'm doing and they success begins an got to find a way that still allows them tell the platform what they are doing question me." It's an important ­ritual. inevitable dip. It takes to be competitive with organizations and ask the platform for the resources What about organizations? What should The business of business has got to They're not taking decisions for him, courage and around that are largely digital, which is much they need. their responsibilities be? be society. That might make them much but they are questioning him. He says: two years to grow your cheaper. I don't honestly know how The main responsibility is to contribute more "human" places. People want a "I feel accountable to them. I have to second curve, but the we're going to solve that problem. Take Speaking of the platform model, is it to the society in which they operate. I'm purpose in life. Making shareholders ­justify my actions." [One is looking for reward is a ­redefined an organization like Danone, which em- necessarily a good thing? really worried about where the money is rich is not a really motivating purpose. that] kind of two-way accountability sense of purpose. ploys, I believe, 480,000 ­people around I think it is. And that's because it allows going to come from to support the Making a society rich is better. rather than participation in the actual the world. That's pushing out a lot of individuals to ­motivate themselves and ­welfare states we have. More and more decisions, which of course they're not money, a lot of consumer buying power. to ­create their own work themselves people will be independent in this gig You talk of a very interesting concept in equipped to do. If we reduce that to 100,500 – something ­instead of being told what to do. economy. They will be busy, but they your new book: the citizen organization. we could do with digital technology won't be rich, so they won't be paying What is that about? You've long been a critic of the idea of The ­perhaps – that's impoverishing society. The do-it-yourself economy and self-­ many taxes. [So the money] has to come It's just an idea. If we treat people as shareholder value. What happens to this importance Danone makes more money, but society responsibility are two things you talk from the corporation. In the past the a citizen, then they have certain rights ­notion within the citizen ­organization? of self- loses. This is a big ­dilemma. Danone about. Are we prepared to take charge? corporation provided this money and responsibilities. Their rights are to Because it seems it's something­ that the then gives a chunk of its profits back to Not at all. Young people – the best of through the salaries of workers, who help in taking big decisions. If you're a shareholders would oppose. responsibility society, which distributes it in welfare them – are more prepared. They do not then paid tax … If they can't have a lot citizen of a country, your responsibility They have no right to oppose. Share- payments or something, or it continues You are ultimately want to join big organizations, unless of people paying taxes, they've got to is to keep the law, to contribute, to holders own shares, but they don't own to employ those people in some way. responsible for the they go to platforms that is. But we need find another way of supporting society. ­behave properly. You're not just a tool – the company in any sensible way. They We've got to begin to ­redefine the growth cycle of your to change our education and encourage If ­society goes down, then they go down. you are rather important. Citizenship can elect the directors, but they cannot career or organization. purpose of a company so that it's not people to think for themselves. Schools They've got to see themselves as part- is something that we prize in any tell the director what to do. They cannot Professional fulfillment just making money for itself, but creat- should provide learning opportunities ners in society, not as some indepen- ­country and we should say the same even ask to see the long-term plan. They requires taking the ing a life for its people. I don't see any for people to practice what life's going dent activity that occasionally pays for organizations. So you wouldn't have no control over directors at all. If time to ask "why?" and models yet of that. We've got to change to be like, which is forming groups and rent in society. They've got to be much become a citizen [of a company] unless they don't like what we're doing, they "how?" and determining the capitalist idea so that it's more ­creating their own opportunities. more involved. you've been there for three years or can sell their share. how to act accordingly. ­human-based and less money-based. 64 Think:Act 25 Russia Russia Think:Act 25 65 Russia's growing pains

Wherever you look right now, Russia is in the headlines – and not always for the best reasons. But as the recently re-elected president looks to boost the economy, is Russia's "resurgence" a force to be reckoned with, or simply a busted flush?

by Noah Sneider

s Russia's elite gathered the coming years. Then his tone shifted in a ­gilded hall, Vladimir sharply. He announced that Russia had Putin strode onstage in a developed a new array of what he called crisp black suit and took "invincible" nuclear weapons. "There is his place behind a white simply nothing in the world capable of lecternA emblazoned with Russia's withstanding them," he declared stand- two-headed eagle. It was early March, ing before the crowd. A ­video screen just weeks before the 2018 presidential played animations of missiles blazing elections and Putin had come to deliver into the sky and tracing a trajectory his annual Presidential Address to the seemingly bound for the United States. Federal ­Assembly. In lieu of real cam- "Nobody wanted to listen to us," he said paigning, the speech served as the artic- of the West, "so listen up now." The institute

/ ulation of his vision for the country. He ­audience erupted with applause. ready to roar? All eyes are spoke of delivering "high-quality health- Putin's speech encapsulated where on Russia as it moves toward care," "tec­ hnological development" and Russia stands after 18 years of his rule: ­redefining its geopolitical role. of how he will be looking to "promote It is resurgent on the world stage, if small business." He promised to curb not belligerently so, with a sputtering

photo: photo: frank herfort rising poverty rates and make Russia ­economy and a series of mounting chal- one of the world's top five economies in lenges at home. In recent years, 66 Think:Act 25 Russia Russia Think:Act 25 67

carefully curated Thirty The twin shocks of falling oil prices and Russian artists contributed ­western sanctions were mitigated to a certain a piece illustrating Putin's ­extent by prudent economic policy on the part of "unique popularity" to the the ­finance ­ministry and central bank and Russia SUPERPUTIN exhibition ­returned to ­modest growth in 2017. After hitting at Moscow's Museum of Ultra-Modern Art in 2017. 16% in 2015, inflation has been brought down to 2.5%, a historic low for the post-Soviet period. a new image Fashions by ­Budget deficits are at manageable levels. Ratings John Galliano displayed in agencies recently ­upgraded Russia's sovereign Moscow's GUM, a shopping bonds from junk ­status. A new fiscal rule decrees mall known during the Soviet that any revenues gained from oil prices over $40 era for its lines of shoppers per barrel will be set aside to boost reserves stretched across Red Square. ­depleted in recent years. facing dissent ­Hundreds Macroeconomic stability alone is not enough were detained at rallies to spur new growth, however, and the glow of in support of opposition ­geopolitical glory is no longer keeping economic leader Alexei Navalny concerns at bay. "Macroeconomics is like a stop- in January 2018. light, and ours has turned green," says Head of the ­Economic Expert Group Evsey Gurvich, who is also a member of the Economic Council ­under the Pres- ident of the ­Russian Federation. "But a green light isn't enough to generate movement – you still need an ­engine." Without significant reform, the World Russia has ­annexed Crimea, propped up Bashar Bank reckons that growth will hover around 1.8% reuters

/ al-Assad in Syria and fueled a war in eastern "Macroeconomics is like a in the coming years, far ­behind world averages and Ukraine; its ­secret services stand accused of med- trailing even developed Eurozone economies. "We dling in the 2016 US presidential elections and of have entered a third phase in our post-Soviet poisoning an ex-spy with a nerve agent in the cen- stoplight, and ours has ­development," says Evgeniy Yasin, former minister picture alliance

/ ter of the ­English city of Salisbury earlier this year. of the economy and an architect behind Russia's Yet geopolitically, Putin is punching above his turned green, but a green transition to a market economy. ­Following the weight: Russia's economy remains a shade ­smaller "transformational crisis" during the 19­90s and the than Canada's. "Putin talks about healthcare, light isn't enough to generate ­"restorative growth" of the 2000s, Russia has now ­education and social spending, but how does that entered what Yasin ­simply calls "stagnation." fit together with all these new rockets?" says Andrei movement – you still need Putin tasked his advisors with drawing up Kolesnikov, chair of the Russian Domestic Politics plans to boost the economy in the run-up to the institute; tatyana makeyeva institute; tatyana

/ and Political Institutions Program at the Carnegie election. "[He] is thinking about what state he will Moscow Center, a prominent think tank. "When on an engine." leave the country in," says one senior official. The the one hand he talks about the benefit of the efforts have been centered around former Minister ­digital economy, and on the other hand launches Evsey Gurvich, Head of the Economic Expert Group of Finance Alexei Kudrin at the Center for ­Strategic missiles, the system doesn't really work." Research, who himself has said: "The main prob- lems lie within Russia and they are structural and P ropelled in part by patriotic sentiment, Putin in 2014 that Russia responded to the ­Euromaidan an attractive proposition – GDP expanded by an institutional." Years of underinvestment in human reuters; lauren greenfield

/ sailed to re-election on March 18, 2018, although revolution in Ukraine by annexing Crimea and ­average of 7% between 2000 and 2007. That petrol-­ capital has left Russia overreliant on natural his victory in the absence of any real ­challengers 2 . 5 % ­fueling a war in that country's east. The oil price powered model had already begun to falter by 2012, ­resources; predatory government officials cast a was less a vote than a coronation. The win entitles collapsed and the West slapped Russia with sanc- when Putin returned to the presidency after a pall over the business climate; confrontation with him to another six years in power, after which he The level of inflation in tions that restricted borrowing and technology ­constitutionally required stint as Prime Minister. the West has made investment and technology Russia at the end picture alliance

/ will have ruled for nearly a quarter of a century. His of 2017, a historic low transfers. Russia's economy slipped into recession. Even with oil prices hitting $100 per barrel in 2013, harder to ­secure; and, most crucially, the state has next term will be shaped largely by the paradox for the post-Soviet A new ­social contract formed in the wake Russia's economy grew only 1.3%. With Crimea, come to play an outsized role in the economy again, ­between his geopolitical ambitions and Russia's period. of those momentous events. During his first two the Kremlin offered its people a sense of identity stifling innovation and competition. The share of ­economic ­realities. "Since 2014, geopolitical aims terms in office, Putin had offered his people a and status – what Russians call being a velikaya Russians' income from social payments has risen have contradicted economic goals," says Natalia straightforward arrangement: The state oversaw a ­derzhava, or "great power" – at the cost of a dip in from 13.9% to 19.8% since 2000, while the share ­Akindinova, director of the Development Center at rise in living standards, while its citizens kept out living standards. The patriotic euphoria helped coming from entrepreneurial income has halved,

the Higher School of Economics in Moscow. It was of politics. Booming oil-fueled growth made this photos: maxim shemetov ease the sting of the economic crisis. from 15.2% to just 7.6%. 68 Russia Russia Think:Act 25 69

telling signs VTB, a state-run bank, acquired 29.1% of the Magnit retail Economic goals: network in February 2018. Russia and the World Cup an eye towards reform Former Minister of Finance Alexei Kudrin is The global spotlight on Russia in Moscow. "They emerge clear that Russia's will intensify this summer from wanting to create an main problems when the World Cup comes to impression of strength and lie within itself. town – or rather, to 11 cities power, rather than from the stretching from the enclave of position of aiming to improve Kaliningrad on the Baltic Sea living conditions­ and the to Ekaterinburg at the edge economy." World Cup ticket of Siberia. In all, the cup is holders will be allowed to skip expected to cost some $13.2 Russia's onerous visa process, billion. Roughly half of the chipper volunteers have been funds will have come from the recruited and much effort has federal budget. gone into improvements in air and rail networks to help fans Preparations are on schedule, traverse the vast distances but have been marred by between host cities. Even the country's own anti-­monopoly service concerns over corruption and ­believes the state's share of the GDP to have risen efficiency. Construction of the Those efforts to put forward from 35% to 70% over the past decade alone, an stadium in Saint Petersburg, a strong – and smiling – face outsized presence extending beyond its ­traditional one of the main host cities, may be undermined by purview: natural resources. Take the case of ­Sergei more political competition. Stakeholders within ran eight years over schedule ­tensions stemming from Galitsky, who rose from humble roots to ­become a the elite have a lot to lose, as well. "If an imperfect and 540% over budget. The Russia's aggression abroad. billionaire by building his grocery chain Magnit institutional system ­exists, it means someone ben- government reckons that After the poisoning of Sergei into Russia's largest retail ­network with more than efits from it," says Gurvich of the­Economic Expert spending on the World Cup Skripal, a former Russian has added roughly 1% to spy, in Salisbury, England, 16,000 stores. Galitsky was praised as a visionary Group. "And why would they back away from it?" GDP between 2013 and 2018. ­Western countries expelled for building a sophisticated logistics system that Indeed, a more likely path involves less invasive Most analysts expect the a host of Russian diplomats. allowed Magnit to operate in far-flung towns and changes to spiffy up existing ­institutions without economic boost from tourism And while a boycott of the small cities that large retailers typically ignored; th altering their underlying foundations. "Structural this summer to be minimal: World Cup looks unlikely, the some called him Russia's Sam Walton. When he 35 reforms remain a topic of discussion in the expert The Gaidar Institute reckons atmosphere surrounding it looked to cash out early this year, the buyer he community, but they are not the lighthouse for an influx of jobs and consumer has begun to "look more like found was not another private entrepreneur. It was, economic policy," Natalia Orlova, chief economist demand connected with host- the 1980 Olympics," said tellingly, VTB, a state-run bank. The position Russia at Alfa-Bank, Russia's largest private bank, ­explains. ing could add 0.2% to GDP in Kolesnikov, referring to when holds on the World The government hopes that better staffing and the second and third quarters. America led a ­boycott to Bank's Doing Business protest the Soviet Union's Putin's terms have all begun with a ­reform plan, 2018 report on a list business conditions and targeted ­investments will Yet economic return was invasion of Afghanistan. and Kudrin and his allies hope that their program of 190 countries, spur development. Thirty-five-year-old Minister for will be ­adopted. "The ­future government has only an impressive jump Economic Development Maxim ­Oreshkin points to hardly the point of hosting an international spectacle But perhaps the greatest

from 2012 when it getty images (2)

/

two years to ­realize an agenda of change," Kudrin the World Bank's business ­ratings: The country th ranked 120 among th th like the World Cup. Instead, risk to Russia's image lies

wrote following the election. "It's less a window of jumped from 120 to 35 place between 2012 and 2018 cup world fifa; the kremlin; rg.ru; sources: gger grey. e

183 countries. / the government sought on the pitch. The national

opportunity than a crack." But the signals coming 2018. By that measure, it is now easier to start a dividends of a less tangible team bowed out of Euro bloomberg

/ from the Kremlin so far suggest that the govern- business and ­enforce contracts in Russia than in character. "In the eyes of the 2016 in the group stage and ment favors a far less ambitious agenda. "The the United States. Putin also appointed a swathe of population, it brings a sort of failed to advance in the 2017 chances that our new-old president decides on young "technocratic" governors touted as more symbolic added value," says Center, a prominent think Sochi. "These mass projects ­Confederations Cup. Even ­radical reforms are quite low," reckons Yasin. From ­efficient than their predecessors. Such­adj ustments Andrei Kolesnikov, chair of the tank. Under Putin, Russia has are emblematic," says Natalia Putin had to admit after the Putin's perspective, altering the underlying system may help keep the stagnant system afloat. The Russian Domestic Politics and embarked on a host of such Akindinova, director of the Euro Cup flop: "We haven't on which his ­power rests carries too great a risk. question is if it will be enough to get Russia's Political Institutions Program megaprojects, most notably Development Center at the seen beautiful play from the at the Carnegie Moscow the 2014 Winter Olympics in Higher School of Economics illustration: maximus chatsky illustration: More economic ­freedom, the logic goes, will beget ­economy flying like its rockets. ■ photos: andrey rudakov national team for a long time." 70 Think:Act 25 Adidas Adidas Think:Act 25 71

Sprinting to a digital future

World-famous German sports brand Adidas has a bold plan for tackling the challenges of digitization head on. Head of Global Sales Roland Auschel explains why he thinks the company's three-point strategy can edge out the competition.

by Titus Chalk photos by Dirk Bruniecki

oland Auschel covers a lot of ground, ­youthful talent he and his fellow executive board both literally and metaphorically: He members have attracted to ­Herzogenaurach, the sets the pace with his long stride and as village where founder Adi Dassler grew up and he walks, he talks with unwavering trained as a cobbler. ­enthusiasm about Adidas. He's been Auschel, the head of global sales, has the look Rwith the company for almost 30 years and in that of someone who spends plenty of time in the time he's seen it grow beyond all recognition. ­company gym: He's trim, silver-haired and keeps Today, you can hear children shrieking with this interview with Think:Act running, rarely ­delight at the on-site kindergarten. But otherwise, ­slowing down as he conducts a bounding walk the former barracks is leafy and peaceful, dotted through the ­complex and answers some questions with trees, sports pitches and the ever-growing on how the company is getting on track for the number of buildings that house one of ­Germany's challenging years ahead. youngest major companies – the average ­employee age here is only 37. Inside the gleaming Laces You are halfway into Adidas' new strategic plan ready. get set. go! building where walkways criss-cross ­beneath a called Creating the New, which was launched in Roland Auschel glass canopy, you can see exactly what that means: 2015. It highlights three key areas: speed, cities and is helping Adidas open source. Can you explain what makes these prepare for the scores of hip, young netizens clutching ­laptops­ biggest race facing and sporting company track pants, ­beanies or things so important to Adidas? today's ­companies: ­sweatshirts. In this environment, ­Auschel seems We developed the strategy in 2014, just after we digitization. ­avuncular and one of the team, ­energized by the had to declare that our previous strategy 72 Think:Act 25 Adidas Think:Act 25 73

a bold move Adidas will become the first sports brand to go open source and invite athletes, "If we implement ­consumers and partners these things to be part of its brands. correctly, they designers, product experts and people who we have fully dedicated to making the future happen. should lead to They work two, three, sometimes five years out in terms of technologies, materials or ­approaches to brand desire – design. They also have a higher degree of indepen- dence in the company, so they can really go far and it's brand out – and bring ideas back to us. We think of them as our beacons, our pilots, showing us the way to desire that will the future. Looking to the near future – and the 2018 World make us win Cup: How big of a marketing opportunity does the tournament represent to Adidas every four years? in this industry." $211 It's very significant. We've produced the official million ball since 1970 and we're very proud of that ­relationship. It ties us to the world's biggest was invested ­participation sport. The World Cup is a ­sensational by the Adidas brand activation platform: You can show off your Group in 2017 in latest innovations, your latest designs to the world, reasearch and on the field of play, on athletes who are very development alone. ­aspirational for people around the world – be it ­Lionel Messi or others. We can't wait for the World Cup to start.

­cycle, Route 2015 [the strategy launched in 2010 Then you look at the notion of open source You're making a digital push in production with 57% Given Adidas' success in the past few years, what that aimed to grow the business by 40–50% to €17 and the opportunities digitization provides there. something called the Speedfactory, as well. Could ambitions do you still have for the company? billion by 2015], wouldn't yield the expected ­results. That's probably the most radical decision we took you ­explain what the Speedfactory is exactly? The percentage by We want to be the best sports company in the So we had to ask ourselves what would make a in 2014. We were a 70-year-old company that was We can produce certain products in a ­factory that which the Adidas world. That's our ambition, what binds us ­together. Group increased its ­difference. We thought: "Where does the­consumer very proud of its history. We wouldn't have had the is fully automated and requires very few ­people to e-commerce sales We all believe that sport has this power to change live today?" We believe in key cities: New York, Los Roland guts to pursue an open-source strategy if we hadn't be there. We launched the first one in­Ansbac h and over the course lives. It's not about being the biggest or even the Angeles, London, Paris, Shanghai and Tokyo. We Auschel just had a moment of failure. It gave us an have just opened the second one in Atlanta. One of 2017 as a result of most profitable. It's about being the best. That's asked: "How do we want to create products?" That ­opportunity to take a risk in allowing others to machine knits the shoe's upper. The second its Creating the New what inspires us, and I would love to ­contribute to led us to the speed choice. And finally: "How do we ­influence our creative process and contribute to ­machine makes the Boost foam midsole [the new strategy. that. That's why I've just signed up to the company want to build the brand going forward?" And that Adidas Head of our brand's DNA. innovative cushioning material]. Then a third for five years – a big decision at my age. took us to the question of open source. If we imple- Global Sales ­machine attaches the outsole and a fourth adds ment these things correctly, they should lead to Roland Auschel How much is the company investing in digitization? stability through bands applied to the side. If you So it's not just about selling sneakers, it's about began his now brand desire – and it's brand desire that will make Are there particular areas that Adidas is looking to have robots that can pass the shoe from one changing lives? decades-long us win in this industry. focus on? ­machine to the next, you can basically produce this We see the positive impact of sport on not just our career at the ­company in 1989 We approached this whole notion by saying shoe without any human labor involved. Although lives, but all lives. Look at the obesity problem in What has all of that meant in terms of your as a strategic ­whatever can get digitized, will be digitized. We we still need someone to put the laces in! the world, at other cultural and ­environmental ­digitization program? planner. He was had said e-commerce would be worth $2 billion challenges. I was at a big sales meeting in Miami It's had a huge impact on it. Because if you ask appointed to the ­under the previous plan, but when we came back Adidas has also created something called the last week where we had an hour-long presentation yourself what brings these factors together, you executive board to the ­market, we doubled that to $4 billion by ­Future Team. What's their mission statement? from Parley for the Oceans. They clean up plastics quickly come to digitization. How does the lifestyle in 2013. 2020. We are also hiring hundreds of engineers and The Future Team is everyone who works on from the sea, which we then turn into a knitted of our consumer work? It's all digital. It's Facebook, software engineers to help us figure this out. We're ­innovation in the company – think material ­upper – from a threat into a thread. If we can help Snapchat, Instagram and so on. And that's where turning ourselves into much more of a software ­innovations, our Boost foam soles when they make the world a better place, that's the best future our entire activation effort is shifting. company than we used to be. ­initially launched. It's a combination of ­engineers, for our company. ■ 74 Think:Act 25 Nandan Nilekani Nandan Nilekani Think:Act 25 75

It is the world's most audacious national biometric identification program, and it was rolled out in record time. Nandan Nilekani, the architect of India’s Aadhaar ID, explains how the project's success had as much to do with sophisticated technology as it did with navigating political uncertainties.

by Neelima Mahajan

ndia is so much more than just a country. The degree of diversity running through it ­demands that it be seen as many different countries rolled into one, a ­complicated ­tapestry of troubling contradictions: It has Iboth the fourth-highest number of billionaires in 1,354,051,854 the world and abysmal levels of poverty. Governing a country this complicated is a colossal challenge, pairs of eyes in India* especially as perceived ­certainties can change in the blink of an eye. The 2011 census estimated 139 million ­Indians ­migrate from one part of the coun- try to ­another ­every year, making it hard to keep tabs on this ­constantly shape-shifting population. So far, India had lacked a nationwide ID card system. While US citizens have a Social Security Number and the UK uses the National Insurance Number, there was no such system in ­India. Differ- getty getty images

ent identity documents existed, sure, but none of /

them were ­universal: Only those who planned to travel abroad would acquire a passport, those who paid taxes would get a PAN card or those who ­voted would bother to enroll for a Voter ID card. And none of these documents matter very much to the approximately 270 million people that represent

photo: photo: jonathan torgovnik the some 20% of the population living on

* un projected population data for 2018 Iris scans are one biometric feature used for Aadhaar ­registration. Some 1.14 billion Indians have now enrolled for this national ID program. 76 Think:Act 25 Nandan Nilekani Nandan Nilekani Think:Act 25 77

less than $2 a day. The one document that they Aadhaar was an audacious experiment from the were most ­likely to possess would be a ration card, word go. Often there was no “root” document to a ­relic of the post-World War II era entitling those base all this on, something like a birth ­certificate – with low ­incomes to receive subsidized food, fuel in rural India, most people didn't ­bother to ­register and other items from the government – hardly a births at all and so for many Indians, this was the proof of ID and ­often misused or misappropriated. first time they were getting any official proof of The government was facing a real challenge: their identity. Nilekani had to figure out a way to how to ensure that social welfare programs could roll out the machinery that created a foolproof reach the people needing them the most. But ­until ­identity for India's 1.3 billion people, and in record recently, the government just didn't or couldn’t time. "This was a project of unprecedented techno- know who or where they were. Moreover, estimates logical ­sophistication … We had to have a fairly suggest that the lack of an underlying ID system ­solid and ­robust way of identifying a person and meant that ­between 10–40% of government funds making sure that a person did not claim more than were ­being wasted, diverted or simply ­embezzled. one number," says Nilekani. To do that, UIDAI That paints only half of the ID ­picture, however. used biometric deduplication: digitally represent- ­Basic ­services, like banking, remained out of reach The biometric features ing an individual via 10 fingerprints, both irises for a vast section of the population simply because used to create an and a ­photograph of the face. "Then the largest they had no way of telling the bank who ­they were. individual's Aadhaar ­biometric ­deduplication database was about 100 profile include The first step was to give people a ­proper identity million, so this was uncharted territory – to go scans of all 10 fingers, document that was universal, ­portable, digital and, both irises and from 100 ­million to one billion." most importantly, foolproof. a photograph. Nilekani understood that he needed to work fast. India is a ­democracy and with elections every "When you have the Enter Nandan Nilekani, co-founder of Infosys, the five years,­political considerations can derail even company that can take some of the credit for spear- the best-laid plans. Policies and projects are often heading India's IT revolution. "Seattle has Bill. 10 × tied to political motivations, so initiatives started opportunity, the Bangalore has Nandan," author Tom Friedman by one government are quickly scuttled by the next. wrote, likening him to ­Microsoft's Bill Gates. In The largest biometric ­­ "When you have the opportunity, the quicker you quicker you build fact, it was a discussion with Nilekani that inspired deduplication database build something and roll it out, the less the risk Friedman to pen his now famous book, The World had previously held that something will happen to it," he says. A ­regular Is Flat. In a sense, Nilekani – and the ­company he 100 million records. at global events like the World Economic Forum at something and roll it Aadhaar increased helped create – highlight the contradictions that Davos, Nilekani is used to rubbing shoulders with this tenfold – to one out, the less the risk exist in India: A world-class IT sector rubs shoul- billion. the world’s movers and shakers. He is a savvy net- ders with systems and processes that are more in worker and knows how to get deals done. He th tune with the 19 century. In a hope to change that, brought that skill with him and exploited it to get that something will Nilekani stepped into the uncharted waters of the Aadhaar project off the ground. In the 14 getty getty images

/ ­Indian officialdom in 2009 and became the chair- months that it took to launch the Aadhaar ­platform, happen to it." man of the UIDAI (Unique Identification­A uthority 85% he made sure he had a trustworthy CEO who could of India), a government body tasked with imple- handle the day-to-day affairs while he managed the of India's population Nandan Nilekani, Co-founder of Infosys menting the world's biggest ­biometric ­national ID was enrolled in complex environment. and the architect of the Aadhaar ID program program, Aadhaar. After five years at the helm, he Aadhaar by March India has a federal government structure is now back at Infosys as chairman, but his ­story 2017. which meant that apart from managing expecta- about how he steered Aadhaar into ­existence is tions at the central government level, Nilekani also ­fascinating and it began with identifying the goals had to network with the ministers and bureaucrats

gentur focus; jonathan torgovnik and breaking down the problem. from India's 29 states and seven union territories. a

/ The first goal behind Aadhaar, he declares, was Apart from that, he met all the central government inclusion. "If we can create a single identity plat- ­departments, the Reserve Bank of India, the World form which is portable across the country, which Bank, various multinational institutions and ­major is digital and online, then people will be able to companies. "By reaching out to all these people magnum magnum photos

between two worlds / ­advance their life," he says. The second goal was and convincing them about the merits of what we Nandan Nilekani was able to bring experience fiscal: More and more government programs were are doing, we were able to build a nationwide leading one of India's directed towards individual entitlements such as ­consensus around this platform," he says. The sec- premier IT companies unemployment insurance, healthcare, pensions ond thing he did was keep the design simple, even

to the public sector. photos: raghu rai and scholarships. minimal, so that it would be easy to roll out. 78 Think:Act 25 Nandan Nilekani Nandan Nilekani Think:Act 25 79

"There's a temptation to solve too many problems these corrupt ecosystems. Today more than 500 The potential applications of Aadhaar are huge. which Aadhaar is used to authenticate; in the event in one solution. If you make a solution too heavy, million Indians have their bank ­accounts linked to It could be linked with India's healthcare system that the person does not have Aadhaar, or in the it sinks under its own weight. We had to keep the their Aadhaar ID – as a result, they can electroni- to digitize and link medical records across hospi- event that the Aadhaar authentication is not going solution simple and lightweight and we designed cally receive money from the government or tals, laboratories and pharmacies. It has potential through, then there has to be a fallback mecha- it as a set of layers," says Nilekani. So the first layer ­anybody else within 48 hours. "Usi­ ng technology, applications in education to track and authenticate nism to ensure that genuine beneficiaries are not was about getting everyone to have an ID. we are able to make sure that 100% of the rupee academic performance of students. Issues remain, denied their benefit. That needs to be done in all Nandan The system was designed for scale in order to went to the person intended and so it is a ­dramatic however, the biggest of which are concerns about the systems that use Aadhaar." Nilekani reach a billion people in a reasonable amount of ­increase in people getting what they were entitled the creation of an Orwellian state where the gov- Nilekani is optimistic. He sees Aadhaar as a time and could enroll 1.5 million people a day. To to," ­explains Nilekani. ­Estimates suggest that the ernment is able to track everything citizens do. platform for innovation, just like the internet and achieve those kind of numbers, UIDAI created an ­government has ended up saving $9 billion in Nilekani dismisses such concerns. "There has been GPS were. "The GPS answers the question: Where Nandan Nilekani ecosystem of partners who would work with set ­reduced fraud – all on the back of the $1.5 billion a lot of care taken in the design of Aadhaar for pri- am I? And Aadhaar answers the question: Who am co-founded Infosys, one of technology and process specifications and help ­investment in putting ­Aadhaar in place. As World vacy. So, the financial records are in the financial I? Today there is so much innovation in the world with the actual enrolments while it remained as Bank President Jim Yong Kim once remarked: system, the health records are in the health system. which is a combination of the internet and GPS Although data privacy India's ­premier concerns are being IT companies, the central number-issuing authority. "At peak we "This could be the greatest poverty killer app we've [We] deliberately designed it as a federated data and companies like Google, Facebook, Uber and raised in the face in 1981. He left the had something like 35,000 enrolment stations ever seen." ­architecture." he says, adding that the data in the Apple all exist because of these fundamental tech- of huge numbers company in 2009 to across the country," says Nilekani. Nilekani had Apart from streamlining government ­subsidies, Aadhaar system cannot be shared unless it’s an nologies," he says. "We think that Aadhaar will be of potential future serve as chairman achieved 600 million Aadhaar enrolments by 2014 there have been other benefits too. For instance, ­exceptional requirement for, say, national security. a platform for huge innovation and we are going to applications, Nilekani of the Unique­ and by March 2017 the figure stood at 1.14 billion, Aadhaar has given a huge boost to financial The other hot-button issue is about exclusion: see lots of innovative applications in the coming remains positive ­Identification in his outlook that or around 85% of India's population. ­services by making it dramatically easier to open a images Aadhaar is supposed to be a voluntary platform, years." The applications are huge and exciting, to Authority of India the system will In 1985, then Indian Prime Minister Rajiv bank account, buy a mutual fund or acquire an but has become de facto mandatory because it is be sure, but public policy has to play its part, work- prove a platform for getty

/ before returning as Gandhi famously said that of every rupee spent by ­insurance policy. In telecom, it's become easier to linked with so many day-to-day things. For now, ing in a way that the privacy and rights of Indian innovation. non-executive the government for the welfare of the poor, only acquire a SIM card. These might seem to be very this matter is in the Supreme Court. But what does citizens can remain secure. How this is done will chairman in 2017. 15% reached the intended beneficiary, highlight- simple things, but the fact is that these services Nilekani think about it? "I think Aadhaar ­itself is determine whether Aadhaar will indeed help India ing the level of corruption in the system. Three were out of reach for large portions of the popula- becoming almost universal. The exclusion is com- leapfrog into the next century, but for now it has ­decades later the situation hadn't improved much. tion simply because they were unable to provide a ing down," he says. "Attention has to be paid to given this complex, multifaceted country the sense

The introduction of Aadhaar ­upended many of valid proof of identity. narinder nanu photo: make sure that if there is a particular social ­benefit of what a new identity can bring. ■

Aadhaar: How it works and how it's evolved

An ID program to reach every demographic The enrolment The Aadhaar system: on the path to universal coverage With many Indians having never had formal ID, Aadhaar is process While the Supreme Court of India has emphasized that ­enrolment into Aadhaar cannot especially helpful in providing those living under the poverty To ensure that each be made mandatory, it is increasingly required for a wide range of government schemes 1.14 level better access to social welfare programs. person receives only and benefits. As of March 2017, some 85% of Indians had enrolled in the system. billion one Aadhaar number, A photograph 980 the UIDAI (Unique Indentification 720 1,263,065,852 total population Authority of India) 100 510 total population in 2012 Aadhaar holders set up a ­deduplication (in million) ­database built on All 10 fingerprints Iris captures OCTOBER DECEMBER DECEMBER FEBRUARY MARCH 270,000,000 three features. 2009 2010 2011 2012 2013 2014 2015 2016 2017 living in poverty* The Aadhaar Card is primarily SEPTEMBER DECEMBER SEPTEMBER a means of individual identification. First Aadhaar Standing Committee Aadhaar Act An Aadhaar ID is: number issued Report on Aadhaar Bill comes into effect ∙ Universal, digital and secure ∙ Linkable to multiple applications JANUARY DECEMBER OCTOBER MARCH 80 % ∙ Suitable for use as a banking of those in poverty live in rural areas address Creation of Introduction of Supreme Court interim order Re-introduction and passage the UIDAI first Aadhaar Bill stating Aadhaar is voluntary of Aadhaar legislation

*people living on less than $1.90/day (world bank). source: world bank snapshot 2012; united nations source: state of aadhaar full report 2016-17 Service Think:Act 25 81 Food for thought

Europe 769 Take a deep United dive and find out Kingdom Germany mobility on demand 106 United States 245 more in related France 1,393 New designs for articles, studies and 109 Israel China magazines. 362 383 new consumer needs

India 84 Coming soon to your next ­ridesharing pickup: cars with a flexible interior that can be individ- Oceania Latin America 333 ually configured to your preferenc- 41 es. By 2020, a many as one million structural management of these specially designed vehicles, many of them electric, may be on artificial intelligence the road in Europe, the United Think you can’t? AI startups across the world States and China. Large orders and falling component costs could Right now AI is provoking a startling shift in innovation. →→ on the rise translate into halving the price of Get unique insight Roland Berger and Asgard's global investigation of ridesharing. "What this new vehicle into the trend that's startups charts the state of play. The US dominates and Copy the ant. reshaping the world: category does is put the passenger, although the EU sits ahead of China, no single European https://rb.digital/­ not the driver, firmly center stage,” Building agility and resilience into your organization country achieves critical mass on its own. 2INXNpL explains Jan-Philipp Hasenberg, is easier than you think – if you think small. partner at Roland Berger. The new vehicles could give automotive OEMs an exciting new product line, given that the reduced complexity self-driving technology of these vehicles will allow them to Will old MacDonald have an autopilot? be manufactured for about half the cost of a conventional car. Most talk about autonomous former director of the Strategic driving tends to focus on cities. Planning Department for Munich →→ making passengers happy In fact, the more profound impact City Utilities. The low labor costs Consumers are changing. Say hello to the new may be in the country where the of new mobility providers would breed of cars: https://rb.digital/2skpMDb elderly, the disabled and school- mean that in many places, heavily An individual ant is not very smart. decisions based on data and experi- Take the shortest path. Over aged children are all currently subsidized public buses that now Collectively, however, ant colonies mental results rather than instinct. 5 time, as businesses evolve, certain underserved because their trans- run on extremely limited routes build some of nature’s most remark- Whether the analytics are as simple as processes and business units lose their portation needs have been very with limited frequencies could be able structures. Following five simple A-to-B testing – or as advanced as purpose. Deciding what you need to expensive to meet – until now. replaced by profitable private rules can help your organization regression analysis – let the facts drive stop is often as important as deciding Preliminary studies suggest that shuttles that could be called achieve similar feats: your decisions. what you need to start. driverless vehicles would improve wherever and whenever they are switch jobs. Breaking your the lives of all three groups while needed. As a bonus, open spaces anchor your purpose. 3 organizational structure down to (From the Roland Berger report Simple strengthening the rural economy. would pose fewer technical chal- 1 ­Understanding the larger goal its smallest possible components can Smarts: Five design principles for "Managed fleets of shared autono- lenges, giving autonomous taxi makes it easier for groups to align make adapting to change much easier. building resilient and agile organiza- mous vehicles – once we have companies the test market they getty images. illustration: sascha bierl sascha illustration: images. getty / their efforts and even to keep working. Focus on the big picture. Keep tions.) overcome the technical difficulties need before they take on city roads. As Nietzsche wrote: "He who has a why 4 managers focused on ­genuinely – would be an enormous help in to live can bear almost any how." strategic issues and away from micro­ →→ leaning into change rural areas. They would cut operat- →→ reconnecting the countryside test. More and more, businesses management ­opportunities to help Become a quick-change artist and set your ing costs while improving service Shift your perspective on autonomous cars'

2 today have the ability to make stay focused on what matters most. ­organization apart: https://rb.digital/2xkeZim peter lilja photo: quality," said Gunnar Heipp, potential: https://rb.digital/2EPBWIw 82 82 PURPOSE What makes Amost all entrepreneurs want to want entrepreneurs all Amost Think:Act Stakeholder theory pioneerStakeholder r.edward theory freeman invented to solve our solve to invented ­be most of the world has world the of most purpose. threehe answers questionsconcerning purpose. has dedicated hislife tohelping organizations create that makes pose, and doing whatever you can get can you whatever doing and pose, for each other – none of us can do it do can us of none – other each for that is the spirit of capitalism. It is not is It capitalism. of spirit the is that can cooperate create something bigger than them- a culture that brings out the best in everyone. Here a culture that bringsout the best ineveryone. re ad ut o mny a many as money, for lust and greed whom making money is the only pur only the is money making whom with their businesses. selves. Capitalism works because we do the right thing, create some good some create thing, right the do dwarfed dwarfed by the thousands of a and businesspeople who are trying to trying are who businesspeople and our is It alone. a wt. u tee a ape are apples bad these But with. way lieve. Of course there are some for some are there course Of lieve. You oncesaid that "if you you miss what makes capitalism tick."capitalism is What just focus on financiers,just focus it then, in your opinion, Yes, that’s what business is about. Think of all of Think about. is business Should business,or companies, the vocabularies that we have we that vocabularies the be seeking to change the world? seeking to be capitalism tick

25 ­ capitalism ­together ­human ­problems tick? to create value desire to create to desire ­access ­capit ­busi alism and to all of all to so that so nesses nesses -

R. Edwa r Freeman isaprofessor at the A d F tkhle Approach, ­Stakeholder R. Edward Freeman Author of Strategic U ­

ree niversity of Virginia.

Management:­ man

We can be the generation that makes that generation the be Wecan Unilever to Whole Foods to thousands to Foods Whole to ­Unilever The possibilities are virtually unlimited. odr t cet vle l wti a within all value create to holders holders and cooperating with our stake- hope. We can create a nation of entre of nation a create Wecan hope. o w ae eig opne from companies seeing are we Now business better. We must be. framework of a free, competitive and competitive free, a of framework people those on focus can we and preneurs to create value for their stakeholders. their for value create to a mk bsns a isiuin of institution an business make can the around entrepreneurs" "social of world explicitly to trying act on purpose shut out of participating in business. in participating of out shut democratic society. If we can do this, we done all of it, but it has had a and countless others. Business hasn’tBusiness others. countless and bu proe vle, tis stake ethics, values, purpose, about ? who have lost hope and been and hope lost have who We need to elevate our thinking What do you think business can It’s really simple: very We need to enact a new of story become in the future?in the become ­physics ov polm lk the like problems solve ­i u kolde i the via knowledge our nternet. We have had to had Wehave nternet. of semiconductors of ­major ­b usiness. role. role.

■ - -

photo: ashley florence / university of virginia. illustration: sasan saidi

photos: pr; julia terjung / pr; gui gomes / pr www.rolandberger.com +49 899230-0 80538 Munich Sederanger 1 Roland GmbH Berger Charles-Edouard Bouée Publisher A few of our contributors

is the Moscow for for sculptor. His works are held The Atlantic,New The York painter, photographer and in Latin America, the USA, is aLebanese-Brazilian in museumcollections . His workThe Economist . has alsoappeared in China andEurope. camille kachani Times noah sneider Melissa Frost Sub-editor Corporate Solutions Axel Springer SE Mark Espiner Editor Neelima Mahajan Editor inChief Regina Koerner & Communications Head of GlobalMarketing → → page 64 page 12 and Slate. corr ­ espondent

Street Journal, His work hasbeen featured is anillustrator andpainter

The NewThe YorkerThe, Wall I in based inGermany. M Ruksaldruck GmbH & Co KG Printing Einhorn Solutions GmbH BianchiAnna Tanja Sannwald, Pawel Pedziszczak, Corporate Solutions Axel Springer SE Eberle Constantin Director) (Art Blasius Thätter Design Times andGQ. ­publications lik PRI olaf hajek → page 42 N The NewThe York T

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