Extractive summaries of the articles curated from TOP TEN BUSINESS MAGAZINES to promote informed business decision making
Week 211 – September 24-30, 2021
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Shaping Section : Ideas and forces shaping economies and industries
Natural-gas shortages threaten governments’ green goals
The Economist | September 25, 2021
Yet another crucial global market has gone from glut to shortage at breakneck speed. Last September in Europe it cost €119 ($139) to buy enough gas to heat the average home for a year and the continent’s gas-storage facilities were brimming. Today it costs €738 and stocks are scarce. Even America, which has an abundance of shale gas, has seen prices more than double—albeit from a much lower level—and could see further increases if its winter is a cold one.
The shortage has many causes. A cold European spring and a hot Asian summer boosted energy demand. Rebounding industrial production has lifted the global appetite for liquefied natural gas (LNG). Russia has been piping less gas into European stockpiles. Hawks suspect it of trying to spook the market and ensure its new Nord Stream 2 pipeline is approved. But it has also faced disruptions, including a fire at a processing plant in Siberia. Gas has been plugging gaps in power production from other sources. The wind did not blow much in Europe this summer, while droughts interfered with hydropower output. The rising price of the permits needed to emit carbon in the EU has made coal expensive. So there is little alternative to burning gas for electricity as well as for heating homes.
Sorting this out requires accurately diagnosing what has gone wrong. Governments have not made enough allowance for the intermittency of renewable energy. The world has too little nuclear power—a low-carbon energy source that is always on. Interventions and subsidies for gas will only make things worse. Expensive energy angers voters and hurts the poor. But subsidising energy in a squeeze, as Italy is doing, or capping prices, as Britain does, will exacerbate shortages and make politicians’ commitment to greenery look empty. Governments should use the welfare system to support household incomes if they must, while helping energy markets work efficiently.
The long-term challenge is to smooth out volatility as the switch to renewables continues. Eventually, cheap battery storage might solve the intermittency problem; right now, more gas storage would help too. In the meantime tweaks to the market could improve things.
3 key takeaways from the article
- Yet another crucial global market has gone from glut to shortage at breakneck speed i.e, the natural gas market.
- The shortage has many causes including natural e.g., cold European spring and a hot Asian summer boosted energy demand and industrial such as rebounding industrial production.
- Sorting this out requires accurately diagnosing what has gone wrong. The long-term challenge is to smooth out volatility as the switch to renewables continues.
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Topics: Energy Market, Natural Gas, Inflation, Global Economy
A Crack Opens in the App Store Economy
By Mark Bergen | Bloomberg Businessweek | September 14, 2021
When Apple Inc. introduced its App Store in 2008, the company’s founder and chief executive Steve Jobs had a message for iPhone app developers. “We are not trying to be business partners,” he told the New York Times. Jobs meant that developers didn’t have to feel threatened because Apple’s main business was selling phones, not taking 30% commissions on app sales. But the comment could be interpreted very differently today, when many developers—and government officials—see Apple less as a partner negotiating in good faith than as a feudal lord levying an unavoidable tax.
On Sept. 10 a federal judge partially vindicated the critical view of the company by ruling it had to allow app developers to direct users to web payment systems to complete transactions. The decision stems from a feud with Epic Games Inc., the creator of the smash hit Fortnite, over whether it could use its own billing service within the game, skirting Apple’s standard fee. When Epic did so over Apple’s objections the phonemaker removed Fortnite from its app store, and Epic sued. The decsion will allow developers to start steering people who make in-app purchases away from Apple’s App Store and toward the web, where payments processors such as PayPal Holdings Inc. and Stripe Inc. typically charge rates of 2% to 3%.
While Apple avoided the worst possible scenario, the case could be the first major crack in the foundation of the $142 billion smartphone app industry it and Alphabet Inc.’s Google created when they launched parallel app stores 13 years ago. The ensuing wave of mobile apps revolutionized the way consumers interact with devices while concentrating a massive amount of power—financial and otherwise—with the companies who’d established themselves as gatekeepers.
If the Epic verdict stands, it would apply only to the way people pay app developers rather than extend to concerns about other allegedly anticompetitive behavior. But there is undeniable momentum to overhaul how app stores operate. Apple’s biggest critics see payments as just the beginning. After the ruling, members of Congress from both parties called for new anti-monopoly laws.
3 key takeaways from the article
- Many developers—and government officials—see Apple less as a partner negotiating in good faith than as a feudal lord levying an unavoidable tax as it charges 30% commissions on app sales through its app store.
- On Sept. 10 a federal judge partially vindicated the critical view of the Apple by ruling it had to allow app developers to direct users to web payment systems to complete transactions.
- Apple’s biggest critics see payments as just the beginning. After the ruling, members of Congress from both parties called for new anti-monopoly laws.
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Topics: Technology, Competition, Anti-trust, Regulating
Industry Insights Section: Trends and anomalies shaping an industry
The rise of digital marketing in medtech
By Ralph Breuer et al., | McKinsey & Company | September 24, 2021
Healthcare professionals (HCPs), like many others, have been profoundly affected by the shift to remote work triggered by the COVID-19 pandemic. As they have become more comfortable with remote work and digital communications, medtech companies have realized the importance of adapting to digital to better engage with HCPs, including digital marketing, e-commerce, and virtual sales channels. The authors explore how leading medtech companies are using digital-marketing and analytics tools to tailor the content, timing, and format of their interactions with HCPs to improve the quality of engagement and the returns on their marketing investments. Success stories from medtech leaders have indicated that the greater funding is mainly being allocated to four key areas.
Product launches. With most trade shows and conferences canceled because of the pandemic, medtech product launches have largely shifted to digital channels. Among the companies in the survey, 80 percent reported having used email and social-media campaigns to launch a new product in 2020, while 65 percent had launched products at online conferences.
Lead generation. As HCPs embraced remote interactions, medtech companies intensified to use digital marketing for lead generation. Among the companies in the survey, 45 percent believed that email campaigns were the most effective digital channel for generating new opportunities during launch, while another 40 percent favored social-media campaigns.
‘Next-best-action’ analytics. In recent years, it has become important to convey a value proposition that goes beyond a single product to the broader portfolio of solutions. “Next-best-action” analytics can help enhance digital-marketing campaigns to work closer together with other marketing and sales channels. There is a strong need for that, highlighted by 74 percent of respondents. The impact is a better coordination between channels. Additionally, analytics can help medtech companies to reach HCPs with additional product solutions that can complement their current purchases and create value for the HCP, the healthcare facility, and the patient.
Omnichannel campaigns. By using a coordinated, multichannel approach to marketing campaigns, medtech companies are able to engage with HCPs at the right time with the right message in the right format. Successful companies are including digital campaigns along with more traditional channels, such as inside sales and face-to-face rep visits, as an important component of their omnichannel strategy to reach HCPs.
3 key takeaways from the article
- Healthcare professionals (HCPs), like many others, have been profoundly affected by the shift to remote work triggered by the COVID-19 pandemic.
- As they have become more comfortable with remote work and digital communications, medtech companies have realized the importance of adapting to digital to better engage with HCPs, including digital marketing, e-commerce, and virtual sales channels.
- Success stories from medtech leaders have indicated that the greater funding is mainly being allocated to four key areas: product launches, lead generation, next-big-action analytics and omnichannel campaigns.
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Topics: Health Care, Business Model, Technology
Leading & Managing Section
How to Build a Transparent Relationship with Your Suppliers
By Farida Ali | Harvard Business Review | September 24, 2021
Companies of all types have been affected by pandemic-related supply chain disruptions, but many of the operational challenges they’ve faced over the past 18 months were magnified by the pandemic, not caused by it. Those problems reflect a longstanding and fundamental shortcoming in how companies’ relationships with their product and component suppliers are structured. Even in the absence of black swan events, manufacturers will continue to be at risk until they establish new ways to work with suppliers that ensure full transparency regarding the sources, availability, and life cycles of their mission-critical products and components.
Most companies understand how supply chain transparency can affect their ability to manufacture and deliver products. Very few, however, apply a disciplined process that requires suppliers to make important product and supply chain information available to them. Instead, they either passively wait for critical information to be provided or attempt to gather and manage those insights on their own, lacking the depth or details that only suppliers can provide. As a result, companies often react to negative events rather than plan for them. They place too much emphasis on the cost of essential products or components and pay too little attention to their inherent supply chain risks.
The solution starts with the belief that the end benefits of supplier partnerships based on full transparency will far outweigh the difficulties involved in risk mitigation. You must be prepared to do whatever it takes to succeed and communicate that strong sense of purpose. Some lessons about how to establish such a dynamic are:
- Your suppliers must understand that supply chain risk management is a priority.
- Consult with your suppliers at the product design and specification stages so that supply chain resiliency can be established at the outset.
- Demonstrate a willingness to establish deeper, long-term relationships with suppliers in exchange for true risk-management partnerships.
- If necessary, you should be prepared to award business based on a supplier’s cooperation in providing necessary information that can help you to mitigate the risk.
- Information from suppliers — including risk factors for specific components, end-of-life notifications, and details on potential supply chain disruptions — needs to reach your company’s product and engineering teams in a timely manner.
- Companies should establish a rigorous, data-driven internal process for evaluating supply chain risks and a risk mitigation protocol that’s endorsed and closely monitored by senior management.
2 key takeaways from the article
- As the global supply chain grows more interconnected and complex, the impact of climate change expands, and geopolitical tensions and trade restrictions increase, the likelihood of disruptions is bound to increase.
- Companies must plan accordingly. Those plans should include revamping how you select and work with suppliers to ensure greater transparency, sharing of risk, and supply chain sustainability.
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Topics: Supply Chain, Risk Analysis, Decision-making
Three Ways to Sell Value in B2B Markets
By Keränen et al., | MIT Sloan Management Review | September 01, 2021
The ability to quantify and communicate value in business-to-business (B2B) sales is more important than ever. As customers face pressure to reduce costs while maintaining profitability, and more competitors are digitally enhancing or “servitizing” their offerings, value-based selling (VBS) has become critical in B2B markets. Yet when it comes to turning the idea into action, many companies seem to stumble. The key challenges of VBS often stem from the confusion and uncertainty about the actual value salespeople are supposed to sell, the outcomes they are supposed to price, and the risks and responsibilities the seller and buyer are supposed to share. While current literature considers VBS to be essentially a one-size-fits-all approach to sales, it leaves managers clueless about how to apply it in different situations. This is particularly acute in B2B markets, where vendors need different capabilities depending on whether they are selling high-value products, value-intensive services, or performance-based solutions. Based on the authors’ decade-plus of field research with more than 70 companies in a wide range of B2B industries, they suggest that rather than viewing VBS as a single strategy, vendors should choose from three different approaches.
- Product-centric VBS is the easiest way for many companies to transition to VBS. This approach still builds on most manufacturers’ greatest asset — the product — but shifts the sales pitch from product features to customer benefits. In product-centric VBS, the key idea is that, informed by deep customer insights and product expertise, vendors are able to innovate superior offerings that can unlock substantial and measurable cost-reduction or revenue-generation opportunities for customers.
- Customer process-centric VBS shifts the focus from selling valuable offerings to facilitating valuable improvements in customers’ business processes, producing measurable financial benefits. Here, the vendor’s role is to educate customers on how to more effectively apply specific resources in their own value creation processes.
- Performance-centric VBS shifts the selling focus from innovating offerings or delivering process improvements to guaranteeing performance outcomes and realized value in use (the net present value of benefits that an asset generates for its owner under a specific use). Here, pricing logic is usually tied to results such as improved productivity, efficiency, or availability, or decreased TCO or total cost per unit.
3 key takeaways from the article
- The ability to quantify and communicate value in business-to-business (B2B) sales is more important than ever.
- As customers face pressure to reduce costs while maintaining profitability, and more competitors are digitally enhancing or “servitizing” their offerings, value-based selling (VBS) has become critical in B2B markets.
- Three different approaches vendors should choose from for value-based selling are: product-centric, customer process-centric, and performance-centric.
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Topics: Supply Chain, Business Model, Selling
Entrepreneurship Section
Five Strategies New Business Owners Can Implement To Gain Market Share
By Corey Kelly | Forbes | September 28, 2021
Increasing market share depends on decisions and factors that vary from industry to industry. However, there are overlapping components for cornering whatever market your business is aiming for.
- Define your brand. A few tips to get started: Research your target market, defining what values, traits or attitudes best exemplify your ideal customers. Implement that research and analysis into the creation of your brand by asking yourself, “What will my clients know about my company right off the bat?” Incorporate those traits and values into the tone and message of your company’s website, content, social media, marketing, and overall essence of what makes your brand unique and intriguing.
- Study the competition. The first task at hand is owning up to determining what your direct competitors do better than your company currently does. Once you’ve sorted out your company’s current shortcomings, you need to define the unique value propositions that make your product or services stand out in comparison to your competitors.
- Target your market. You can start by categorizing your current customer base into specific demographics that allow you to better understand why your products or services are already appealing to them. Once you’ve determined basic information about your customer base, take that knowledge and apply it to their assumed psychological profiles.
- Be innovative, yet flexible. How do companies maintain long-term control of their market share? It’s a combination of sticking with what makes their brand and services unique and coveted, along with being willing to adapt to any necessary changes within their industry.
- Connect with your customers. You can do everything right as a business, but if you fail to continuously assess your customers’ needs or directly engage and acquire feedback with them, you’re practically guaranteed to lose market share steam in the long run.
2 key takeaways from the article
- Increasing market share depends on decisions and factors that vary from industry to industry. However, there are overlapping components for cornering whatever market your business is aiming for.
- Five of these components are: define your brand, study the competition, target your market, be innovative, yet flexible and connect with your customers.
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Topics: Entrepreneurship, Startups, Market Share, Competitive Advantage
5 truths about failures and successes as an entrepreneur
Written by Cristopher Ramírez | Entrepreneur | September 29, 2021
Its been a little more than 10 years have passed since the author started his entrepreneurial path. Ten years of doubts, fears, learning, victories, failures, joys, and disappointments. But according to the author every trip, regardless of its duration, leaves its learnings, and a 10-year-old one leaves very valuable lessons that he shares with us.
- You will fail at some point. There would be a business idea that never came to fruition despite your best efforts. But it was an experience that could change the course of your future. Every entrepreneur eventually stumbles for one reason or another. Failure haunts us, it is a matter of time. The best thing you can do is accept the idea that you will fail, and that’s okay. Failure makes us learn. It is not wise to believe that you will always make the right decisions and avoid every possible failure. Accept failures on your way, learn from them, and never take them to heart.
- Start from your passion. Entrepreneurship is a job. And a job should not only reward you financially, but also satisfy a feeling of belonging, relevance and meaning. A job based on your passion can give you this. Passion for your business will help you through times of trouble, encourage you to keep going despite obstacles, and ease countless hours of hard work. Discover your passion and create a business around it.
- Crises always come when you least expect them. Life is unexpected and that you should not neglect. Just because you’ve found your passion doesn’t make you exempt from working hard, failing, and having to worry about other areas of your life. You must be vigilant, and try to cope with the crisis as well as possible. They may be unavoidable, but you must have a persistent attitude towards them – regardless of when they arrive.
- In all uncertainty there is opportunity. And it is so in all crises. There is always an area where the opportunity for growth exists. As they say: “you buy when the markets go down.” Take advantage of the moments of change.
- You are not alone and you should not be. Many entrepreneurs who have succeeded and / or failed have felt alone. The entrepreneurial path tends to be lonely. But it just feels that way, because it really shouldn’t be. You should avoid walking the road alone. Do not start to undertake on your own, look for a mentor, ally with people who may be interested in your business idea, seek to convince friends, school/work colleagues, etc. It is better for your idea and for you.
A key takeaway from the article
5 truths about failures and successes as an entrepreneur are: you will fail at some point, start from your passion, crises always come when you least expect them, in all uncertainty there is an opportunity and you are not alone and you should not be.
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Topics: Startups, Entrepreneurship, Decision-making
How To Correctly Organize Your Organization for Success From the Beginning
By Stu Sjouwerman | Inc | September 27, 2021
As a business leader, you’ve got some options when it comes to how you organize your company, and some might work better than others depending on your industry and the type of goals you have. You can also revise your structure over time to meet new demands or objectives. In fact, it’s pretty common for companies to go through growing pains and pivot to something different based on what they learn. Although that flexibility can keep you going, change can be costly and stressful. So, what can you do to up the odds of success right from the start?
Focused on looking at objectives and key results. In his book, Measure What Matters, John Doerr expanded on some concepts from Andy Grove, former CEO of Intel. Doerr focused on looking at objectives and key results, or OKRs. These can be set for the entire company, a group, or just a single person in your business. They outline a goal and describe a benchmark–, or how you measure success for that goal. Whatever you’re measuring, at the end, you should be able to look back and answer, “Did I do it or didn’t I?” with a simple yes or no.
Consider the ability to scale. Another way to give yourself a leg up, leveraging your organizational structure, is to think about whether you can scale your setup. Many companies don’t do this at the beginning because they are so concerned with just getting footing. But ideally, start with something you can continually replicate over and over at a highly competitive price. If you can’t scale it, don’t do it, period.
Set the culture and rules. You should have a concept of what behaviors at the organization should look like in terms of behavior well before you hire anyone or complete a transaction. If you verbalize your terms and vision in your handbook before the company starts hiring, then you can attract the right people and know exactly how they are going to drive the business goals. It’s easy to discuss expectations during hiring and make sure everyone is clear on what their role will be.
3 key takeaways from the article
- Organizational structure is not necessarily a rigid thing. You can change with the market if need be.
- But your setup always should be intentional, rather than an afterthought or hodgepodge.
- Using the objectives and key results, or OKRs framework, considering scalability, and defining your culture and expectations, are all strategies you can do from day zero, not from day one
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Topics: Startups, Entrepreneurship, Organizational Design
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