THE ACCOUNTABLE CEO • NEUROSCIENCE AND LEADERSHIP • BUILD YOUR DIGITAL CONFIDENCE GLOBAL ENTERTAINMENT ARTIFICIALAND MEDIA OUTLOOK IMAGINATION Using digital technology to unlock human creativity Summer 2017 $12.95 Display until August 29, 2017 www.strategy-business.com ARRIVE AN ELITE EXECUTIVE. EMERGE A VISIONARY LEADER. The Advanced Management Program is designed to help ADVANCED accomplished senior executives navigate the complex global challenges facing businesses today. Along with an elite group MANAGEMENT of peers and the renowned HBS faculty, you will explore best management practices and bold new strategies that will PROGRAM disrupt your way of thinking, challenge your assumptions, and improve your ability to lead with vision and purpose. ADVANCED MANAGEMENT PROGRAM 10 SEP–26 OCT 2017 | 02 APR–17 MAY 2018 LEARN MORE AT WWW.EXED.HBS.EDU/SB-AMP editor’s editor’s letter 1 The Algorithm and the Artist How many geniuses does it take to run a company? As the influential technology and media commentator Shelly Palmer notes in our Thought Leader interview, artificial intelligence (AI) will soon be robust enough to overtake many jobs, even those that require managerial and creative skill (page 132). Business profession- als, at every level of the hierarchy, will need to apply some truly artistic genius on a day-to-day basis or we, too, may be vulnerable. This is an especially critical matter for the entertainment and media (E&M) industry, which is getting more and more competitive, especially when it comes to generating original and compelling content. Hence this issue’s focus on “arti- ficial imagination.” Three articles here, developed as part of PwC’s Global Enter- tainment and Media Outlook, explore the range of possibilities when algorithms become artists. One is the Palmer interview. Another is on page 66, where Deb orah Bot- hun and David Lancefield of PwC look at AI’s growing role in the production Illustration by Lars Leetaru and distribution of movies, songs, and writing and in how consumers experi- editor’s letter editor’s ence them. And in “A Strategist’s Guide to Artificial Intelligence” (page 82), Anand Rao, a longstanding expert in this field, identifies three types of AI: assisted intelligence, which helps businesses improve what they already do; aug- mented intelligence, which makes possible new skills that were previously undo- able; and autonomous intelligence, which operates without human involvement — except, again, for those rare geniuses who can outpace the robots. Several articles cover the rapid evolution of technology and media. Augment- ed reality is transforming retail stores (page 8). Enthusiastic followers — or fans, as Christopher Vollmer calls them — are the growth engine for E&M companies 2 (page 55). And PwC’s annual look at technology acumen, the Digital IQ study, shows how companies can keep up with ever-changing tech skills (page 44). Perhaps one new high-tech function will be monitoring the accountability of chief executives. In the annual study by Strategy&, PwC’s strategy consult- ing group, of chief executive tenure trends, Per-Ola Karlsson, DeAnne Aguirre, and Kristin Rivera document the link between ousted CEOs and the reputa- tion of their companies (page 98). For another take on ethical decision making, see senior editor Laura W. Geller’s interview with Kellogg professor Maryam Kouchaki (page 21). Elsewhere, neuroscientist Jeffrey Schwartz, executive coach Josie Thomson, and I talk about the “High Road,” a mind and brain function conducive to stra- tegic leadership (page 114). And an insightful look at NYU Langone Medical Center shows how to turn around any complex organization (page 32). I personally remain optimistic that no matter how many jobs are lost to automation and artificial intelligence, the world will still need to employ human beings. Once they’re sentient, robots won’t want to cope with the multifaceted complexity of the human race. If I’m wrong, my AI replacement will have to edit a magazine for robot readers. Until that day comes, the algorithm and the artist will live in complementary coexistence. Art Kleiner Editor-in-Chief 87 issue kleiner_art@ strategy-business.com strategy + business leading ideas 82 8 Augmented Reality Comes to Retail Kamil Klamann and Sekoul Krastev The Pokémon Go craze may have faded, but it provides clues for retailers using technology to engage consumers. 15 Connecting the Dots from Brand to Demand Emre Sucu, Matthew Egol, and Edward Landry The best consumer strategies start with knowing where and why people shop for your product. 21 Why Good Employees Do 28 Bad Things Laura W. Geller Kellogg’s Maryam Kouchaki on understanding — and avoiding — ethical breakdowns. 28 Us versus Them: Reframing Resistance to Change Elizabeth Doty How to bridge the gap between those who champion transformation and those who challenge it. 8 essays HEALTHCARE MARKETING, MEDIA & SALES 32 Management Lessons from One 55 How to Make Entertainment and Hospital’s Dramatic Turnaround Media Businesses “Fan”-tastic Eric J. McNulty, Nathaniel Foote, Christopher Vollmer and Douglas Wilson Capturing the strategic advantages Putting people at the core is the of fan-centric businesses requires key to major improvements in functional transformation. financial, performance, regulatory, and quality indicators. 44 TECHNOLOGY Winning with Digital Confidence Chris Curran and Tom Puthiyamadam The right mix of talent, innovation, and experience will help your company master emerging technology. features MARKETING, MEDIA & SALES STRATEGY & LEADERSHIP 66 AI Is Already Entertaining You 98 Are CEOs Less Ethical Than Deborah Bothun and David Lancefield in the Past? How technology endowed with creative Per-Ola Karlsson, DeAnne Aguirre, intelligence changes the way companies and Kristin Rivera generate and distribute content. Why more chief executives are losing their jobs after scandals and corporate misconduct. TECHNOLOGY 82 A Strategist’s Guide to 106 CEO Turnover in 2016 Artificial Intelligence Anand Rao As the conceptual side of computer ORGANIZATIONS & PEOPLE science becomes practical and relevant 114 The High Road Less Traveled to business, companies must decide what Jeffrey Schwartz, Josie Thomson, type of AI role they should play. and Art Kleiner Neuroscience research shows 88 The Road to Deep Learning how to become a better leader. THE THOUGHT LEADER INTERVIEW 132 Shelly Palmer Deborah Bothun and Art Kleiner One of the world’s leading digital- technology commentators sees a stark future for entertainment and media companies. BOOKS IN BRIEF 148 The Business of Tetris Laura W. Geller 151 Care Personally, Challenge Directly Theodore Kinni END PAGE: RECENT RESEARCH 154 Control Issues Matt Palmquist Startups are valued significantly higher and attract more financing after their founders relinquish some power. Cover illustration by John Hersey Issue 87, Summer 2017 www.strategy-business.com strategy+business Published by PwC EDITORIAL Editor-in-Chief Executive Editor Managing Editor Senior Editor Senior Editor Editor, Digital Art Kleiner Daniel Gross Elizabeth Johnson Laura W. Geller Jan Alexander Melanie Rodier kleiner_art@ gross_daniel@ johnson_elizabeth@ geller_laura@ alexander_ jan@ rodier_melanie@ strategy-business.com strategy-business.com strategy-business.com strategy-business.com strategy-business.com strategy-business.com Deputy Managing Editor Associate Editor Chief Copy Editor Information Graphics Editorial Sally Errico Michelle Gerdes Victoria Beliveau Linda Eckstein Operations Manager errico_sally@ gerdes_michelle@ info@ info@ Natasha Andre strategy-business.com strategy-business.com strategy-business.com strategy-business.com andre_natasha@ strategy-business.com Art Director Designers Contributing Editors John Klotnia Laura Eitzen Edward H. Baker William J. Holstein Cesare R. 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