Extractive summaries curated from TOP TEN BUSINESS MAGAZINES to
promote informed business decision making
Week/Issue 209 – September 10-16, 2021
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Shaping Section : Ideas and forces shaping economies and industries
The new economics of global cities
The Economist | September 9, 2021
The economic recovery from the covid-19 pandemic is lopsided in many ways. Vaccinations have allowed some countries to bounce back rapidly, even as others struggle. Demand is surging in some sectors but still looks weak in others. Another big source of unevenness is slowly becoming clear. As national economies come back to life, cities are lagging seriously behind.
Before the pandemic cities seemed invincible, with economic and cultural power becoming ever more concentrated in tiny geographical areas. The exodus from urban areas at the start of the pandemic, which was motivated by fear of catching the virus and which many assumed would be temporary, now looks more permanent and indicative of a deeper shift in preferences. The big question is whether this is something to worry about.
One way to take the pulse of global cities is to use real-time mobility indicators. The Economist has constructed an “exodus index” using Google data on visits to sites of retail and recreation, public transport and workplaces. This compares mobility in large cities with that in their respective countries. The data point more clearly to a different sort of reallocation. Like an egg broken onto a pan, economic activity is gradually seeping outward from the center. What were once the liveliest urban areas are becoming less so.
The opinion is divided on whether the spreading out of economic activity is welcome. Economists have two longer-term concerns. The first relates to employment. Emptier offices and fewer tourists in cities could mean less employment for low-wage workers. The second worry is productivity. A core insight of urban economists is that cities, by cramming lots of different people into a small space, help foster new ideas and technologies. That would hit living standards. Are the concerns valid? On employment, there is the reason for optimism. Economies have been extraordinarily quick to reallocate jobs away from struggling city centers to places with more demand, raising overall employment. It is harder to know whether the shift from city centers will harm productivity.
Cities administrators are shifting their focus from attracting firms to attracting residents who will pay property and consumption taxes and will contribute in improving quality of life. The pandemic will not destroy cities—but it will change them.
3 key takeaways from the article
- The economic recovery from the covid-19 pandemic is lopsided in many ways. One such evidence is as national economies come back to life, cities are lagging seriously behind.
- The exodus from urban areas at the start of the pandemic, which was motivated by fear of catching the virus and which many assumed would be temporary, now looks more permanent and indicative of a deeper shift in preferences.
- One major shift, in response to trends, is the focus of city administrators is shifting from attracting firms to attracting residents who will pay property and consumption taxes and will contribute to improving quality of life. The pandemic will not destroy cities—but it will change them.
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Topics: COVID-19, Cities, Employment, Productivity
What the U.S. Has Learned About Fighting Terror Since Sept. 11
By Peter Martin and Roxana Tiron | Bloomberg Businessweek | September 11, 2021
In recent weeks, our screens have been dominated by images of the rushed U.S. withdrawal and the scramble to relocate Afghans who assisted with the war effort. The scenes raise the question: What if anything did America learn from two decades of conflict across the greater Middle East? Five tentative lessons stand out.
- You can’t fight a war against a tactic. Just like the “war on drugs,” it was always going to be difficult to judge victory in the “war on terror.” This can’t be a war on terrorism or it will never end, but you can struggle against some organizations that are threatening you,” says Seth Jones, director of the transnational threats project at the Center for Strategic and International Studies. When the goals have been more limited, the outcomes have tended to be more impressive. “We’ve learned that it’s not just war,” says Jones. “There need to be other instruments from diplomatic engagement to information, intelligence, and law enforcement.”
- Boots on the ground cannot transform a society and might not even be able to stand up a reliable government. There are limits to what you can do with conventional U.S. forces that haven’t been trained for counterterrorism or counterinsurgency missions.” The hope now is that improved intelligence, unmanned systems, and the use of precision strikes will allow the U.S. to reach overseas terrorist targets without massive overseas troop deployments.
- Pivoting to other regions is hard because the Middle East has a way of pulling you back in. Others argue that without a strong focus on the Middle East, Biden’s pivot to Asia could fall short. Stepping back from the greater Middle East, the last two decades have taught America painful lessons about the nature of deterrence and the limitations of the country’s conventional military superiority.
- The last 20 years have been a “reminder that conventional power let alone nuclear power is not going to be sufficient to prevent adversaries from engaging in provocations that aren’t worth risking war over
- The last two decades caution that competition isn’t just about spending enough. The U.S. has continued to spend far more than anyone else on its military and yet somehow China has still managed to make bewildering progress in closing the capabilities gap.
A key takeaway from the article
- What if anything did America learn from two decades of conflict across the greater Middle East? Five tentative lessons stand out: you can’t fight a war against a tactic, boots on the ground cannot transform a society and might not even be able to stand up a reliable government, Pivoting to other regions is hard, conventional power let alone nuclear power is not going to be sufficient to prevent adversaries from engaging in provocations that aren’t worth risking war over and competition isn’t just about spending enough
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Topics: War, International Politics, International Relations, Middle East
Ford Stops Making Cars In India, The Third U.S. Vehicle Maker To Exit
By Ramakrishnan Narayanan | Forbes | September 13, 2021
Ford Motor Company announced last week that it would stop producing cars in India as the global auto industry continues to grapple with a shortfall in semiconductors and other components due to supply chain disruptions. The Dearborn, Michigan-headquartered company, which has been operating in India for 25 years, is following in the footsteps of other U.S. vehicle makers–General Motors and Harley-Davidson–by shutting down its factories in the country. Ford said Thursday that it had considered several options, but concluded that it had “not been able to find a sustainable path forward to long-term profitability that includes in-country vehicle manufacturing.” The company accumulated losses of more than $2 billion over the past 10 years and demand for new vehicles had been weak.
As part of Ford’s restructuring plan, the company said it intends to expand its Ford Business Solutions operations, which now has more than 11,000 employees. The team will support the global operations, and focus on engineering and technology. The expansion will provide more opportunities for software developers, data scientists, R&D engineers, and finance and accounting professionals, according to the release.
The automaker’s withdrawal comes at a time when the Indian passenger vehicle market has been in a decline over the last five years. Passenger vehicle sales in 2020-21 (following the April-March accounting period) were 2.71 million units, compared with 2.77 million units the previous year, according to the Society of Indian Automobile Manufacturers (SIAM). Sales had reached a peak of 3.37 million in 2018-19.
General Motors stopped selling cars in India at the end of 2017, after two decades of operating in the country. It sold one of its plants to long-time partner, China’s SAIC Motor Corp, and was in talks to sell the second plant to Great Wall Motors of China, a plan that had to be put on hold because of the Covid-19 pandemic and also due to the border standoff between India and China.
3 key takeaways from the article
- Ford Motor Company announced last week that it would stop producing cars in India as the global auto industry continues to grapple with a shortfall in semiconductors and other components due to supply chain disruptions.
- The Dearborn, Michigan-headquartered company, which has been operating in India for 25 years, is following in the footsteps of other U.S. vehicle makers–General Motors and Harley-Davidson–by shutting down its factories in the country.
- The automaker’s withdrawal comes at a time when the Indian passenger vehicle market has been in a decline over the last five years.
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Topics: Auto industry, India, Global Economy
China vows to consolidate its bloated electric vehicle industry—and its ‘Big Three’ are poised to benefit
By Eamon Barrett | Fortune | September 13, 2021
On Monday, China’s minister for industry and information technology, Xiao Yaqing, told reporters that the country’s electric vehicle (EV) sector is too fragmented and in dire need of consolidation. “Looking forward, EV companies should grow bigger and stronger. We have too many EV firms on the market right now,” Xiao said during a press conference, adding that the firms involved in China’s EV sector are “mostly small and scattered.”
According to state-owned Xinhua, there are some 300 EV makers in China. Since 2010, Beijing encouraged the sector’s development by offering tax breaks for companies entering the market and subsidy schemes for consumers who purchased EVs. Now the government suggests market forces should weed out the weaker firms. Beijing has already reduced some of its subsidy schemes, forcing EV makers to raise retail prices, but Bloomberg reports the government will create new regulations to spur consolidation.
Shares in China’s leading EV makers fell on Monday, following Xiao’s remarks. BYD, one of the world’s largest electric-car makers, plunged 4.4% in Hong Kong, while Hong Kong–listed Li Auto and Xpeng slipped 1.68% and 2.8%, respectively. Li Auto is also listed on the Nasdaq, while Xpeng has a primary listing in New York. Despite the selloff, China’s listed EV manufacturers are perhaps the best-positioned to benefit from the government’s push for market consolidation, as tighter regulations squeeze out smaller firms with less access to capital.
“It doesn’t surprise me that share prices have fallen, but overall I see China’s Big Three—Nio, Li Auto, and Xpeng—benefiting in the long run,” says Tu Le, founder and CEO of auto industry consultancy, Sino Auto Insights. Le says the new regulations could create an opportunity for well-financed players to acquire new talent and technology from smaller firms.
3 key takeaways from the article
- There are some 300 EV makers in China. Since 2010, Beijing encouraged the sector’s development by offering tax breaks for companies entering the market and subsidy schemes for consumers who purchased EVs.
- Now the government suggests market forces should weed out the weaker firms.
- Beijing has already reduced some of its subsidy schemes, forcing EV makers to raise retail prices, but it is expected that the government will create new regulations to spur consolidation.
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Topics: Auto Industry, China, Electric Vehicles
Industry Insights Section: Trends and anomalies shaping an industry
Five traps to avoid: The long game of DTC and e-commerce
By Karrel Dorner | McKinsey & Company | September 2, 2021
It happened so quickly it almost felt miraculous: companies around the world pivoted to e-commerce in response to the COVID-19 pandemic. Seemingly overnight, online ordering and delivery were available from restaurants and grocery stores, coffee shops, and traditional retailers. It was a triumph of business ingenuity as companies sought to keep their doors open in the face of an unforeseen challenge. For many, it worked. But not for many others. The authors have identified five short-term traps that often hamper companies’ ability to successfully grow over the long term and also suggested solutions.
- Leading with a tech focus. Companies often take a sequential approach to building their e-commerce business, focusing first on technology and development while deferring focus and investment in areas such as operations and channel management. The solution is organizations should make e-commerce a priority and tie performance goals to outcomes for all cross-functional leaders.
- Building a directionless tech stack. Companies often architect and make technology, design, or ecosystem decisions for quick launch. But the wrong technology platform, architecture, or partners will create significant technical debt, hampering efforts to scale, and adding cost, complexity, and delays to unwind and rebuild. The organizations would be better of by defining the longer-term architecture and building their minimum viable product (MVP) as a steppingstone toward the target state.
- Underinvesting funds and capabilities. Companies often seek to mitigate the risks of launching e-commerce businesses by spending as little as possible, borrowing resources and talent from other parts of the organization and expecting an immediate ROI for every dollar spent. The organizations must create a “learning buffer” in your budget.
- Learning the economics on the fly. Companies often don’t fully understand what unit economics looks like, and they make short-term decisions that stifle growth, or they implement a business model that needs to be redesigned and slows down forward momentum. It would be better if organizations could understand the key drivers of growth and profitability through the lens of profit and loss.
- Building the new business too close to the core. Corporate business-building activities are often hampered by certain challenges associated with working in a legacy organization. The organizations will perform better if they could create physical virtual distance between the new e-commerce and core businesses. Physical separation allows companies to establish new centers to attract expertise and entrepreneurial talent who collaborate with more agile ways of working.
3 key takeaways from the article
- The pandemic has only accelerated consumer demand for the ability to buy online.
- Merely selling online is very different from building a sustainable e-commerce business.
- Companies need to avoid five traps when launching direct-to-consumer operations. These are: leading with a tech focus, building a directionless tech stack, underinvesting funds and capabilities, learning the economics on the fly and building the new business too close to the core.
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Topics: Business Model, e-commerce, Technology, Digital Marketing
Leading & Managing Section
What Evolution Can Teach Us About Innovation
By Noubar Afeyan and Gary P. Pisano | Harvard Business Review | From the Magazine (September–October 2021)
On November 30, 2020, Moderna Therapeutics announced that Phase III clinical trials for its messenger RNA vaccine demonstrated 95% protective efficacy against the SARS-CoV-2 virus that had killed almost 1.5 million people worldwide in the previous 10 months. A relative upstart in the Covid-19 vaccine race and a company that few people had heard of before the pandemic, Moderna looked to be an overnight success. But as its CEO, Stéphane Bancel, has noted, that success was 10 years in the making.
The misconception about the Moderna case, as with many other breakthrough innovations, is understandable. Breakthrough innovations are typically seen as the result of chaotic, random, and unmanageable efforts—the product of pure serendipity or the inspiration of a rare visionary. That view, the authors believe, is deeply flawed. From the authors’ different vantage points, they have come to realize that breakthroughs tend to emerge from a relatively well-defined process modeled on the basic principles that drive evolution in nature: variance generation, which creates a variety of life-forms, and selection pressure to select those that can best survive and reproduce in a given environment. The approach, called emergent discovery, is a structured and disciplined process of intellectual leaps, iterative search and experimentation, and selection. And while it relies on exceptionally talented people, it does not require the next Leonardo da Vinci or Steve Jobs to produce a breakthrough innovation.
Emergent discovery starts with prospecting for potentially important ideas in relatively novel scientific, technological, or market spaces with the goal of generating speculative conjectures, or “what if” questions. These serve as the starting point for an intensive Darwinian-style selection process to find and validate better ideas, soliciting critical feedback from outsiders to identify challenges and evolving the concept into a superior and practical solution. Emergent discovery requires a culture in which people, particularly leaders, in an organization are comfortable broaching seemingly infeasible ideas and challenging dogma—a culture that views “flawed” ideas not as dead ends but as building blocks and considers the evolution of ideas to be a collectively shared responsibility.
3 key takeaways from the article
- Moderna, a relative upstart in the Covid-19 vaccine race and a company that few people had heard of before the pandemic, looked to be an overnight success. But as its CEO has noted, that success was 10 years in the making.
- The misconception about the Moderna case, as with many other breakthrough innovations, is understandable. Breakthrough innovations are typically seen as the result of chaotic, random, and unmanageable efforts—the product of pure serendipity or the inspiration of a rare visionary.
- Contrary to this breakthroughs tend to emerge from a relatively well-defined process modeled on the basic principles that drive evolution in nature called emergent discovery, is a structured and disciplined process of intellectual leaps, iterative search and experimentation, and selection.
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Topics: Innovation, Business Model, Leadership
Four Myths About Unauthorized Subcontracting
By Felipe Caro et al., | MIT Sloan Management Review | September 08, 2021
Suppliers can pose serious risks to a company’s reputation and finances, and the nature of the modern supply chain — global, complex, and frequently opaque — only increases the dangers. Companies that outsource manufacturing often discover that their suppliers rely in turn on layers of subcontractors, often without the buyer’s knowledge or approval. Making matters worse, these unauthorized subcontractors are more likely to operate unsafe workplaces, engage in unfair labor practices, and violate health and environmental laws. The pandemic has made the need to address supply chain visibility even more urgent by exposing the terrible working conditions in plants producing essential goods.
Through their research findings, the authors tried to debunk four common misunderstandings or myths about the practice of unauthorized subcontracting — and offer specific guidance for companies seeking greater visibility into these opaque links in their supply chains.
Myth 1: All Factories (in Developing Countries) Are Doing It. Data suggests that the impression is incorrect. In fact, the authors found that manufacturers vary widely in their use of unauthorized factories. Only a small fraction (11%) always send their orders to a non-compliant subcontractor, while a majority (57%) never engage in the practice. Unauthorized subcontracting also varies by country.
Myth 2: Unauthorized Subcontracting Is Mostly Driven by Price. It’s not always the main driver. More important is whether a factory is running close to capacity when a new order comes in.
Myth 3: Consumer Advocacy Doesn’t Work. The reality is that global consumers have more power to effect change than might be assumed. The authors found that the chance of unauthorized subcontracting is 22% lower for orders placed by well-known brands than lesser-known, private-label brands.
Myth 4: Companies Can’t Do Much. Buyers can use analytics and big data to discover with high levels of accuracy when manufacturers are most likely to use subcontractors. They can even predict which orders will probably be farmed out.
3 key takeaways from the article
- Suppliers can pose serious risks to a company’s reputation and finances, and the nature of the modern supply chain — global, complex, and frequently opaque — only increases the dangers. Companies that outsource manufacturing often discover that their suppliers rely in turn on layers of subcontractors, often without the buyer’s knowledge or approval.
- Making matters worse, these unauthorized subcontractors are more likely to operate unsafe workplaces, engage in unfair labor practices, and violate health and environmental laws.
- Four myths that need to be debunked about the practice of unauthorized subcontracting are: All Factories (in Developing Countries) Are Doing It, Unauthorized Subcontracting Is Mostly Driven by Price, Consumer Advocacy Doesn’t Work and Companies Can’t Do Much.
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Topics: Supply Chain, Industrial Accidents, Sustainable Development
Entrepreneurship Section
If You Can Deal With These 4 Frustrating Parts of Entrepreneurship, Becoming a Founder Might Be For You
By Hillel Fuld | Inc Magazine | September 13, 2021
Entrepreneurship is not for everyone, nor is it an easy path to success. If the odds scare you away, entrepreneurship is likely not for you. With that in mind, here are four additional reasons that being an entrepreneur is not for everyone.
You need money to build a product and you need a product to get money. There is a real response to this challenge and it’s called a prototype. You can’t build the entire product without money, but you absolutely can build a prototype, a minimal viable product, without breaking the bank. You can then take that working product to an early-stage investor who deploys capital at this stage of the journey.
Your product needs a value to get users, but you need users for there to be value. Figure out a way to give your users real value even if they are the only user on the platform. Once you figure that out, users will join and the value of your product will increase, then more users will join, and then your value will increase some more.
You need experience to have a track record but need a track record to get experience. You need a track record for many investors to even consider you, but if no one is willing to invest, how can you get a track record? The solution is building some trust in other ways. It’s true that you don’t have a track record, but if an investor gets an intro from someone they trust, or if they Google you and see all the content you produced about your space, they might consider you for investment even without a track record.
You can’t gather feedback without talking about your product but talking about your product is risky. Talk to people, but not just any people. Find people you trust, preferably people who know your space.
2 key takeaways from the article
- Entrepreneurship is not for everyone, nor is it an easy path to success.
- If the odds scare you away, entrepreneurship is likely not for you. With that in mind, four additional reasons that being an entrepreneur is not for everyone are: you need money to build a product and you need a product to get money, your product needs a value to get users, but you need users for there to be value, you need experience to have a track record but need a track record to get experience and you can’t gather feedback without talking about your product but talking about your product is risky.
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Topics: Startups, Entrepreneurship, Risk, Decision-making
Your Email Marketing Is Destined to Fail Without These 3 Essentials
By Scott Baradell | Entrepreneur | September 14, 2021
In a world where marketing pitches come at us from all angles and on every device, email marketing has held steady as the favored channel for consumers. When used well, this platform can help you attract, convert, close and delight your buyers. Don’t underestimate it — your company’s email strategy can make or break you. When it comes to building a successful email-marketing strategy, there are three specific elements that will help you achieve your business goals or move you further away from them, depending on how well you use them.
Frequency. Nobody wants to get ten emails a day from a subscription. It doesn’t matter if the content is brilliant, useful or undeniably accurate. Your leads will get annoyed if you send them too much information. Avoid losing contacts by not only asking their desired frequency to get your emails, but also by relying on your metrics. Don’t pay too much attention to your open rate alone — look closely at your click-through rate too. This will indicate how interested your leads are and how often they take action to prove it.
Relevance. Subscribers are more likely to become annoyed if your content is not relevant to their interests and needs. Relevance is a tricky concept because it depends on many factors like the consumer’s knowledge level, his or her stage in the buyer’s journey and good timing. You must know your audience in order to understand these three.
Action. We receive emails basically everywhere — at home, work and while on the go. When receiving an email, we may take a look at it immediately, but sometimes it requires further action like submitting a form, watching a video or visiting a website. Try to reduce or streamline required actions in order to make it easy for contacts to follow through at any time of day. First and foremost, make your offers simple. Your buyers don’t like to be given too many choices; when they are, they often won’t buy anything at all.
3 key takeaways from the article
- In a world where marketing pitches come at us from all angles and on every device, email marketing has held steady as the favored channel for consumers.
- When used well, this platform can help you attract, convert, close, and delight your buyers.
- Three specific elements will help you achieve your business goals or move you further away from them while building a successful email marketing strategy. These are the frequency of emails, their relevance and the type of action required on the behalf of customers.
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Topics: E-mail Marketing, Marketing, Entrepreneurship