Extractive summaries of the articles curated from TOP TEN BUSINESS MAGAZINES to promote informed business decision making | Week 213 |October 8-14, 2021
The world economy’s shortage problem
The Economist | October 9, 2021
For a decade after the financial crisis the world economy’s problem was a lack of spending. Now spending has come roaring back, as governments have stimulated the economy and consumers let rip. The surge in demand is so powerful that supply is struggling to keep up. As rising inflation spooks investors, the gluts of the 2010s have given way to a shortage economy.
The immediate cause is covid-19. Some $10.4trn of global stimulus has unleashed a furious but lopsided rebound in which consumers are spending more on goods than normal, stretching global supply chains that have been starved of investment. Demand for electronic goods has boomed during the pandemic but a shortage of the microchips inside them has struck industrial production in some exporting economies, such as Taiwan. The spread of the Delta variant has shut down clothing factories in parts of Asia.
Yet the shortage economy is also the product of two deeper forces. First, decarbonisation. A rising carbon price in the European Union’s emissions-trading scheme has made it hard to switch to other dirty forms of energy. Swathes of China have faced power cuts as some of its provinces scramble to meet strict environmental targets. The second force is protectionism. Trade policy is no longer written with economic efficiency in mind, but in the pursuit of an array of goals, from imposing labour and environmental standards abroad to punishing geopolitical opponents.
For now, out-of-control inflation seems unlikely. Energy prices should ease after the winter. And In the next year the spread of vaccines and new treatments for covid-19 should reduce disruptions, for example.
But make no mistake, the deeper forces behind the shortage economy are not going away and politicians could easily end up with dangerously wrong-headed policies. The shortage economy could also reinforce the appeal of protectionism and state intervention. The risk now is that strains in the economy lead to a repudiation of decarbonisation and globalisation, with devastating long-term consequences. That is the real threat posed by the shortage economy.
3 key takeaways from the article
- For a decade after the financial crisis the world economy’s problem was a lack of spending. Now spending has come roaring back. The surge in demand is so powerful that supply is struggling to keep up.
- The deeper forces behind the shortage economy are not going away and politicians could easily end up with dangerously wrong-headed policies. The shortage economy could also reinforce the appeal of protectionism and state intervention.
- The risk now is that strains in the economy lead to a repudiation of decarbonisation and globalisation, with devastating long-term consequences. That is the real threat posed by the shortage economy.
Topics: Global Economy, Globalization, Protectionism, Nationalism
Global Economics Intelligence executive summary, September 2021
McKinsey & Company | October 7, 2021
Industry continued to expand in August, and forward indicators point to further near-term growth. The pace of growth slowed, however, as strong demand crossed pandemic-related disruptions; the global purchasing managers’ indexes (PMIs) for manufacturing and services in August were 54.1 and 52.9, respectively, compared with readings of 55.4 and 56.3 in July. Growth momentum remained strongest in developed economies, but economic data in India and Brazil were also positive. The results are consonant with the OECD’s composite leading indicators, which moderated slightly in August but continue to point to strong growth above prepandemic averages.
Economies and businesses experienced supply shortages in August and September, slowing production and stoking inflation. Most notably, demand and prices climbed for crude oil, natural gas, and thermal coal. In McKinsey’s latest executive survey on economic sentiment, respondents cited the pandemic, supply-chain disruptions, and inflation as their top three concerns.
Among surveyed economies, consumer inflation is highest in Brazil (9.7%) and Russia (6.7%); central banks there responded with interest-rate hikes (to 6.75% and 6.25%, respectively). In the United States, consumer inflation eased slightly in August, to 5.3%, but has been above 5.0% for four straight months, a mark not seen since 2008. The OECD expects US inflation to settle to around 2.5% in 2022 and drop below 1.5% in the eurozone. Mainstream forecasts and standard indicators signal no longer-term inflation danger, however.
Consumer confidence and retail sales continue to ebb and flow in counterpoint to the crests and troughs of COVID-19 waves. Most recently, consumer confidence indexes weakened globally and in many individual surveyed economies. Retail sales growth remained strong in the United States; elsewhere, it settled to within prepandemic ranges, except in China, where it slowed.
In the most recent data (for July), trade levels remain high, with values moving toward prepandemic averages. For most surveyed economies, unemployment rates are declining. The equities markets were mixed in September, with some indexes losing ground due to pandemic-related concerns and other disruptions. By the end of the month, the three major US indexes lost an average of 4.8% over the previous 30 days. The US dollar depreciated against major currencies. Except for the equities VIX, where spikes continue, most volatility indexes remain on a downward course.
3 key takeaways from the article
- Industry continued to expand in August, and forward indicators point to further near-term growth. The pace of growth slowed, however, as strong demand crossed pandemic-related disruptions.
- Growth momentum remained strongest in developed economies, but economic data in India and Brazil were also positive.
- The results are consonant with the OECD’s composite leading indicators, which moderated slightly in August but continue to point to strong growth above prepandemic averages.
Topics: Pandemics, Global Economy, Supply Chain
After 20 years of drone strikes, it’s time to admit they’ve failed
By Emran Feroz | MIT Technology Review | October 7, 2021
After the Taliban took over Kabul in mid-August, a black-bearded man with a Kalashnikov appeared on the streets. He was Khalil ur-Rahman Haqqani, a Taliban leader prominent in the Haqqani Network. Ten years ago, the US placed a $5 million bounty on his head. Multiple times over the last two decades, the US military thought they’d killed him in drone strikes. Clearly, Haqqani is alive and well. But that raises a glaring question: if Khalil ur-Rahman Haqqani wasn’t killed in those US drone strikes, who was?
The usual bland response is “terrorists,” an answer now institutionalized by the highest levels of the US security state. But the final days of the US withdrawal from Afghanistan showed that is not necessarily true. A day after an attack on troops at Kabul’s teeming airport, for example, the US responded with a “targeted” drone strike in the capital. Afterward, it emerged that the attack had killed 10 members of one family, all of whom were civilians. This did not match the generic success story the Biden administration initially told. A detailed report by the New York Times forced Washington to retract its earlier claims. “It was a tragic mistake,” the Pentagon said during a press conference, as it was forced to admit that the strike had killed innocent civilians with no links to ISIS.
In fact, America’s last drone strike in Afghanistan—its last high-profile act of violence—was eerily similar to its very first one in 2001 which failed to kill Mullah Mohammad Omar. In fact, he evaded the allegedly precise drones for more than a decade, eventually dying of natural causes in a hideout mere miles from a sprawling US base. Instead, America left a long trail of Afghan blood in its attempts to kill him and his associates.
More than 1,100 people in Pakistan and Yemen were killed between 2004 and 2014 during the hunt for 41 targets, according to the British human rights organization Reprieve. Most of those targets are men who are still alive, like the Haqqanis, or Al-Qaeda leader Ayman al-Zawahiri, who just published another book while thousands of people have been murdered by drones instead of him. It also underlined that the CIA itself, which was responsible for the strikes in the country, did not know the affiliation of everyone they killed. And yet many US military officials and politicians continue to spin the drone narrative.
3 key takeaways from the article
- After every drone attack, the usual bland response is X number of “terrorists,” killed an answer now institutionalized by the highest levels of the US security state.
- More than 1,100 people in Pakistan and Yemen were killed between 2004 and 2014 during the hunt for 41 targets. Most of those targets are men who are still alive.
- Even the targeted groups have joined in: for a couple of years, the Taliban have been using armed commercial drones to attack their enemies.
Topics: War Economy, Drones, Technology and Humans
Airlines Are Ripping Out Business Seats to Create a New Middle Class
By William Wilkes | Bloomberg Businessweek | October 04, 2021
For decades, ferrying tourists to vacation destinations has helped major airlines cover basic costs, but the front of the plane is where they’ve racked up the bulk of their profits. So when the pandemic whacked business travel, carriers were left looking for another way to pad the bottom line. Increasingly they’re finding it in premium economy, where travelers can avoid the cattle-car aesthetics of coach without spending thousands of dollars for the expansive digs of business class. And with Covid-19, growing numbers of leisure travelers are willing to splash out for a bit of extra elbow room at fares that are frequently more than double the cheapest economy seats.
The trend was already on an upswing before the pandemic, with installations of premium economy seats—not including the “plus” sections of coach, which offer extra legroom—growing 5% annually in the three years before the coronavirus hit. Researcher Counterpoint Market Intelligence predicts that pace will accelerate as more carriers embrace the idea of a separate cabin on long-haul flights featuring slightly wider seats, several extra inches of legroom, a deeper recline, bigger screens, and marginally better food and drink. Seats in the premium cabin occupy barely 10% more space than coach, whereas a business-class berth typically requires three times as much room. A premium seat costs $8,000 to $20,000, a fraction of the $75,000 to $250,000 price tag for a lie-flat pod in business class. But it’s still about five times what carriers pay for a coach berth. Deutsche Lufthansa AG says premium economy generates 33% more revenue per square foot than economy and 6% more than business—and is 40% more profitable than the latter because it’s cheaper to install.
The three largest U.S. carriers—American, United, and Delta—have been installing the class across their widebody fleets. Emirates introduced its first premium economy offering this year on some Airbus SE A380 double-deckers and plans to add it to 777X planes on order from Boeing Co. Finnair Oyj, which specializes in flights linking Europe with East Asia via its Helsinki hub, next year will start adding the service on all 27 of its widebodies. Some in the industry caution that the cost could be an issue for airlines just recovering from the financial devastation of the pandemic.
3 key takeaways from the article
- For decades, ferrying tourists to vacation destinations has helped major airlines cover basic costs, but the front of the plane is where they’ve racked up the bulk of their profits.
- So when the pandemic whacked business travel, carriers were left looking for another way to pad the bottom line.
- Increasingly the carriers are finding it in premium economy, where travelers can avoid the cattle-car aesthetics of coach without spending thousands of dollars for the expansive digs of business class.
Topics: Airline Industry, Business Model, Efficiency
Good Leaders Know You Can’t Fight Reality
By Scott Edinger | Harvard Business Review | October 08, 2021
The ability to accept reality is one of the most useful, and most misunderstood, skills for a leader. Acceptance may not sound like a hugely valuable skill, especially because we hear so much about leaders whose force of will seems to defy reality. The most notable example is Apple’s Steve Jobs, whose reputation for pushing people to do the impossible has become the stuff of legends. While there is admirable value in this force of will, this characteristic is often exaggerated in leaders who lack the balancing counterweight of also accepting reality.
The amount of time, effort, and energy wasted by leaders as they argue and fight about reality is astonishing. It takes courage to accept reality as it is, and only then can you and your team begin to make changes. Three kinds of acceptance that leaders should focus on are:
- Accepting Results: Perhaps the worst has happened, or an outcome is simply bad. Leaders can hem and haw, rant and rave, but until they can properly accept what has happened, they aren’t likely to move forward or lead anyone else forward. Not accepting or willfully fighting a result won’t change it. More importantly, it doesn’t put you in a strong position to make changes to prevent future failures.
- Accepting Circumstances. As leaders, we often face circumstances that are beyond our control. Give up control of what you never had control over to begin with and make room for your emotional reaction without acting on every thought or negative feeling. Acceptance gives you power to move forward in the most effective way possible instead of waging a futile battle against circumstances you can’t control.
- Accepting Your Failings and Those of Others. No employee or colleague is perfect. And the good news is that we are all capable of making changes and improvements. While feedback and development efforts can build strengths and address fatal flaws, the critical precursor to change by any leader is the acceptance that they need to change. We must also accept others as they are, and make choices based on the real person, not who we wish they’d become. If the training couldn’t change persons either accept that they have value to your business exactly as they are, or you can let them go.
2 key takeaways from the article
- Acceptance is about acknowledging the facts and letting go of the time, effort, and energy wasted in the fight against reality.
- Your reality may be that you are falling behind on revenue, a competitor has outflanked you with a new product, or that the effects of the pandemic are still hurting your business. Whatever it is you’re facing, you can’t employ your best skills to deal with it until you stop the wrangle against reality and accept what you’ve been handed, ready to change things for the better.
Topics: Leadership, Decision-making, Business Performance
Effective Innovation Begins With Strategic Direction
By B. Tom Hunsaker and Jonathan Knowles | MIT Sloan Management Review | October 05, 2021
What’s one thing your company needs to improve? CEOs word choice may vary by region, but their response is usually the same: the ability to derive more value from their companies’ investments in innovation. More often than not, the underlying problem is that innovation is assumed to be an end in itself rather than the mechanism for achieving a specific form of change. The impetus to innovate is independent from a strategic analysis of where and how innovation can improve the organization’s fit to purpose, or the quality of fit with the expectations of customers and other stakeholders; and its relative advantage, or its distinctiveness relative to alternatives. But most innovation advice given to leaders lacks the context necessary to guide their actions. Improving returns from your innovation efforts requires knowing the type of change you want to achieve. Context matters. In this article, the authors identify the forms of innovation well suited for each of the three primary types of strategic change.
- Innovate to Enhance Magnitude. When you enjoy high fit to purpose and relative advantage, the primary goal of innovation is to develop ways to enhance your existing trajectory and perceptions. This does not equate to complacency or a lack of boldness; change is required, but it should align with the existing momentum of the business so as to further strengthen what makes it relevant and distinctive to existing customers and what is attractive to new customers.
- Innovate to Reimagine Activity. Companies with moderate combined fit to purpose and relative advantage have a valid strategy in place, but they have a pressing need to innovate around how they will achieve their goals. The priority for companies in the Reimagine Activity zone is to identify ways to reconceive their fit to purpose — that is, how their products, services, and delivered value align with customer and other stakeholder expectations — and to boost their relative advantage to reduce vulnerability to substitution.
- Innovate to Shift Direction. A fundamental shift of direction is the correct form of change for incumbent companies whose current strategies did not deliver on their desired outcomes, and for new entrants who are looking to upend the dynamics of an existing industry.
3 key takeaways from the article
- What’s one thing your company needs to improve? CEOs word choice may vary by region, but their response is usually the same: the ability to derive more value from their companies’ investments in innovation.
- Improving returns from your innovation efforts requires knowing the type of change you want to achieve. Context matters.
- Forms of innovation well suited for each of the three primary types of strategic change are: innovate to enhance magnitude of an existing strategy; innovate to reimagine activity; and innovate to shift direction.
Topics: Leadership, Innovation, Business Model
5 Ways To Sharpen The Soft Skill Every Leader Needs For Career Success
By Amy Blaschka | Forbes | October 9, 2021
While amassing experience and knowledge is valuable, there’s one area of professional development essential for a leader’s success, no matter your industry or role: the ability to communicate effectively. You hone effective communication through deliberate practices; it doesn’t just happen. Five ways to sharpen your communication skills are:
- Be clear. Say what you mean and mean what you say. Resist the temptation to try and cover too much ground, and instead, focus on one takeaway. This forces you to get specific about and hone in on your message, and it makes it easier for others to understand you, inspiring trust and confidence.
- Be concise. Mark Twain famously said, “If I had more time, I would have written a shorter letter” — a reference to how much harder brevity is than length. A never-ending email or rambling voicemail is the kiss of death in the communications game. When you want to deliver a message, be intentional about it, eliminate extraneous material, and get to the point.
- Be mindful of your audience. Communication is only effective if your audience receives your intended message, so remember these four words: it’s not about you. Far too often, we assume that everyone thinks, behaves, and communicates the same way we do; big mistake. Instead, take a beat to put yourself in your audience’s shoes, consider their wants and needs, and adjust your communications accordingly. Also, be mindful of your audience’s communication preferences.
- Be intentional with your words. Your word choice sets the tone and elicits an emotional response, two things critical for effective communication. Incorporating evocative language into your repertoire opens you up to a more descriptive, interesting lexicon. Never again will you have to use “nice,” “good,” or “fine”— the four-letter milquetoasts of the word world. Instead, you’ll stand out, capture your audience’s attention, and ensure that your message will be more memorable. And speaking of four-letter words to avoid, banish “just” from your vocabulary. Action-oriented language conveys a strong, clear tone and propels us to do something rather than remain idle. Where possible, minimize passive language and use active voice to add more power and intention to your words.
- Be proactive. Delaying talks, making assumptions, or never following up with someone will erode trust and weaken relationships. Ideally, you want to prevent problems (instead of trying to fix them after the fact), answer questions before they’re raised, and anticipate the needs of those with whom you’re working. Proactive communication can accomplish all of this.
2 key takeaways from the article
- While amassing experience and knowledge is valuable, there’s one area of professional development essential for successful leaders, no matter your industry or role: the ability to communicate effectively.
- Five ways to hone effective communication through deliberate practices are: be clear, be concise, be mindful of your audience, be intentional with your words and be proactive.
Topics: Leadership, Communication, Trust
Discouraged About Your Business? You Might Not be Measuring Your Progress Right
By Nicholas Sonnenberg | Inc | October 8, 2021
When our business doesn’t meet our expectations, it’s easy to focus on everything that went wrong, and every goal we didn’t meet. Dan Sullivan, an entrepreneurial coach, navigates this problem. He’s boiled it all down to one simple concept called The Gap and The Gain. It all comes down to shifting your thinking.
The Gap. High-level entrepreneurs tend to measure their progress in a way that makes them perpetually unhappy. They measure themselves against a perfect future ideal. This is what Sullivan calls being in “the gap.” When you’re in the gap, you’re constantly comparing yourself to a future ideal in your mind. You measure your progress by measuring forward, looking at how far away you are from that future ideal–whether that’s your long-term business goals or some vague level of success. But the problem is that these ideals are hard to define, and they change over time. In many cases, you might have already hit the ideal you had in your mind a few years ago–but you never realized it, because your goal changed before you arrived there.
The Gain. Instead of living in the gap, its better to live in what can be called as “the gain.” This is a way of measuring progress by looking backward. Instead of measuring how far you have to go, do the opposite–look back to see how far you’ve come. How much progress have you made over the past year? Month? Week? Measuring progress by looking backward gives you a more realistic view of what you’ve accomplished and where you’re at. Look back and recognize all the success you’ve had up to this point–the big wins, the small wins, the lessons, and the progress. You may even realize you’ve reached the ideal that was in your head a few years ago.
According to the author try to find a balance that works for you, and don’t get tunnel vision. Remind yourself to look back and see how far you’ve come every once in a while, but never forget about your big dreams and aspirations. After all, that’s what being an entrepreneur is all about.
3 key takeaways from the article
- When our business doesn’t meet our expectations, it’s easy to focus on everything that went wrong, and every goal we didn’t meet. Dan Sullivan, an entrepreneurial coach, navigates this problem. He’s boiled it all down to one simple concept called The Gap and The Gain.
- The Gap. High-level entrepreneurs tend to measure their progress in a way that makes them perpetually unhappy. They measure themselves against a perfect future ideal.
- The Gain. Instead of living in the gap, live in what can be called as “the gain.” A way of measuring progress by looking backward. Instead of measuring how far you have to go, do the opposite–look back to see how far you’ve come.
Topics: Entrepreneurship, Business Success
The Myth of the ‘Overnight Success’ and How Brilliant Ideas Actually Emerge
By Joy Youell | Entrepreneur | October 11, 2021
The notion that all it takes is one great idea to become rich is a siren call for a lot of entrepreneurs. It’s irresistible, it’s driving, and it’s (unfortunately) wrong. That’s just not how ideas work.
How ideas actually work. In the book Where Good Ideas Come From, Steven Johnson talks about the eureka moment, outlining brand new developments, from pencils to batteries to drug therapies. He details identifiable patterns of innovation. Some things have adjacent possibilities, and a good example is emerging technology like neural networks, artificial intelligence (AI), and machine learning (ML). The increased sophistication of these technologies opens new adjacent possibilities for innovation, which means that people will be having light bulb moments as they’re equipped with new tools to actually create something new.
The value of failure. A first predictor of success is the opposite of success: failure. Leadership expert John Maxwell wrote a book in 2007 called Failing Forward, which touted a quantifiable commonality among high-achievers. He explains that the real backdrop to any great success isn’t how they deal with making it: It’s how they deal with failing. Every entrepreneur faces the real possibility of failure, and there’s no better way to cultivate grit than to try and try again.
The power of grit. Psychologist Angela Duckworth wrote a book called Grit: The Power of Passion and Perseverance. Duckworth discusses shared traits among successful people in a variety of contexts. She explains, “…there are no shortcuts to excellence. Developing real expertise, figuring out really hard problems, it all takes time―longer than most people imagine.” Effort, or grit, is the key.
A just cause for an infinite win. Going viral is not the same thing as building an enduring, legacy business. Simon Sinek has broken a lot of ground over the past decade as he guides business owners to practice more perseverance, more empathy, and more nuanced goal-setting. In The Infinite Game, he describes the goal of a lasting business to be centered on a “Just Cause”: “A Just Cause must be: For something—affirmative and optimistic; Inclusive—open to all those who would like to contribute; Service oriented—for the primary benefit of others; Resilient—able to endure political, technological and cultural change; Idealistic—big, bold and ultimately unachievable.”
2 key takeaways from the article
- The notion that all it takes is one great idea to become rich is a siren call for a lot of entrepreneurs. It’s irresistible, it’s driving, and it’s (unfortunately) wrong.
- In the world of entrepreneurship, it’s easy to want to pursue overnight success. But the truth is, it takes years to cultivate a valuable idea. Epiphanies aren’t actually immediate; they are the outcome of long-term memory and arduously obtained knowledge.
Topic: Startups, Entrepreneurship, Success