Extractive summaries of the articles curated from TOP TEN BUSINESS MAGAZINES to promote informed business decision making | Week 221 |December 3-9, 2021
What the Omicron variant means for the world economy
The Economist | December 4, 2021
A little more than a year after the first success of a covid-19 vaccine in a clinical trial, a sense of dread has struck much of the world. The Omicron variant of the coronavirus, first publicly identified on November 24th, may be able to circumvent the defenses built up by vaccination or infection with covid-19. The World Health Organisation declared that Omicron poses a “very high” global risk. The boss of Moderna, a vaccine-maker, warned that existing jabs may struggle against the heavily mutated new variant. Faced with the ghastly prospect of yet more lockdowns, closed borders, and nervous consumers, investors have reacted by selling shares in airlines and hotel chains. The price of oil has slumped by roughly $10 a barrel, the kind of drop often associated with a looming recession.
As we explain this week it is too early to say whether the 35 mutations on Omicron’s spike protein help make it more infectious or lethal than the dominant Delta strain. As scientists analyse the data in the coming weeks, the epidemiological picture will become clearer. But the threat of a wave of illness spreading from one country to the next is once again hanging over the world economy, amplifying three existing dangers. The first is that tighter restrictions in the rich world will damage growth. A lopsided economy fuels the second danger, that the variant could raise already-high inflation. The final danger is the least well appreciated: a slowdown in China, the world’s second-biggest economy.
It is not all gloom. The world will not see a re-run of the spring of 2020, with jaw-dropping drops in GDP. People, firms, and governments have adapted to the virus, meaning that the link between GDP and restrictions on movement and behaviour is one-third of what it was, says Goldman Sachs. Some vaccine-makers expect fresh data to show that today’s jabs will still prevent the most severe cases of the disease. And, if they must, firms and governments will be able to roll out new vaccines and drugs some months into 2022. Even so Omicron—or, in the future, Pi, Rho, or Sigma—threatens to lower growth and raise inflation. The world has just received a rude reminder that the virus’s path to becoming an endemic disease will not be smooth.
3 key takeaways from the article
- The Omicron variant of the coronavirus may be able to circumvent the defenses built up by vaccination or infection with covid-19.
- The threat of a wave of illness spreading from one country to the next is once again hanging over the world economy, amplifying three existing dangers: tighter restrictions could damage growth, a lopsided economy could fuel already-high inflation, and a possible slowdown in China, the world’s second-biggest economy.
- It is not all gloom. The world will not see a re-run of the spring of 2020, with jaw-dropping drops in GDP. People, firms, and governments have adapted to the virus.
Topics: Coronavirus, Global Economy, Recession
The US crackdown on Chinese economic espionage is a mess.
By Eileen Guo et al., | MIT Technology Review | December 2, 2021
A visiting researcher at UCLA accused of hiding his connection to China’s People’s Liberation Army. A hacker indicted for breaking into video game company servers in his spare time. A Harvard professor accused of lying to investigators about funding from China. And a man sentenced for organizing a turtle-smuggling ring between New York and Hong Kong.
For years, the US Department of Justice has used these cases to highlight the success of its China Initiative, an effort to counter rising concerns about Chinese economic espionage and threats to US national security. Started in 2018, the initiative was a centerpiece of the Trump administration’s hardening stance against China.
Now, an investigation by MIT Technology Review shows that the China Initiative has strayed far from its initial mission. Instead of focusing on economic espionage and national security, the initiative now appears to be an umbrella term for cases with almost any connection to China, whether they involve state-sponsored hackers, smugglers, or, increasingly, academics accused of failing to disclose all ties to China on grant-related forms. To date, only about a quarter of defendants charged under the initiative have been convicted, and about half of those defendants with open charges have yet to see the inside of an American courtroom.
Although the program has become a top priority of US law enforcement and domestic counterintelligence efforts—and an unusual one, as the first country-specific initiative—many details have remained murky. The DOJ has not publicly defined the initiative or answered many basic questions about it, making it difficult to understand, let alone assess or exercise oversight of it, according to many civil rights advocates, lawmakers, and scholars. While the threat of Chinese intellectual property theft might be real, critics wonder if the China Initiative is the right way to counteract it.
Reporting and analysis showed that the climate of fear created by the prosecutions has already pushed some talented scientists to leave the United States and made it more difficult for others to enter or stay, endangering America’s ability to attract new talent in science and technology from China and around the world.
3 key takeaways from the article
- The USA’s China Initiative case’s focus increasingly has moved away from economic espionage and hacking cases to “research integrity” issues, such as failures to fully disclose foreign affiliations on forms. Many cases have little or no obvious connection to national security or the theft of trade secrets. A significant number of research integrity cases have been dropped or dismissed.
- Although new activity appears to have slowed since Donald Trump lost the 2020 US presidential election, prosecutions and new cases continue under the Biden administration.
- The report showed that the climate of fear created by the prosecutions has already pushed some talented scientists to leave the United States and made it more difficult for others to enter or stay, endangering America’s ability to attract new talent in science and technology from China and around the world.
Topics: China, USA, Global Economy
Twenty Years After Enron, Investors Are Still Vulnerable to Fraud
By Greg Farrell | Bloomberg Businessweek | December 2, 2021
The collapse of Enron, which filed for bankruptcy protection 20 years ago today, shook the capital markets and led directly to the demise of Arthur Andersen, the auditing firm that approved Enron’s annual statements and accounting acrobatics. For a few years, the specter of Andersen’s fate injected a rigor into its peers’ audits that had previously been absent. The Big Four: Deloitte, Ernst & Young, KPMG, and PwC can point to the absence of any WorldCom-size accounting frauds in the past decade as proof that the industry has mended its ways. But the exposure of false or misleading filings by Valeant, Under Armour, and Kraft Heinz in recent years demonstrate that the system isn’t perfect.
In the 1990s the big accounting firms bolstered their revenue by offering a variety of business consulting services to their audit clients. In 2002, in response to Enron collapse, Sarbanes-Oxley Act limited the types of services that auditing companies could offer. Three of the Big Four which sold off their consulting units under this act, over the past decade have reversed course, acquiring consulting firms to expand their revenue sources, once again building conflicts of interest into the system.
Further to this, several developments have made the auditors’ job harder. As the top global companies have grown dramatically in the past 20 years, accounting firms have come to rely more heavily on technology to do their work, taking batches of raw data from clients at prearranged times and feeding it all into customized analytics programs.
Accounting firms are also offshoring, much as their largest clients have. That reduces direct contact between auditors and corporate executives, which used to be a crucial part of the process. And Covid-19 has accelerated that trend. Remote meetings between the auditors and their client counterparts are now the norm. Industry veterans express concern about the lack of face-to-face meetings at the client’s work sites. In many cases, the auditors no longer have casual conversations with managers and clerks on the front line, people who once might have rolled their eyes at some of the numbers claimed by management but are now cut out of the process altogether. Cryptocurrencies added to these worries as blockchain is geared toward anonymity.
3 key takeaways from the article
- The collapse of Enron, which filed for bankruptcy protection 20 years ago today, shook the capital markets and led directly to the demise of Arthur Andersen, the auditing firm that approved Enron’s annual statements and accounting acrobatics.
- The scandals led to new rules and laws for corporations and auditors that were meant to prevent future frauds of such a massive scale.
- Reversal of separation of audit & consulting by the same firm, remote meetings between the auditors and their client counterparts, more heavily reliance on technology to do audit work, and cryptocurrencies create doubt that investors are any safer today than they were before Enron Corp. failed.
Topics: Auditing, Fraud, Enron
The shifting consumer packaged goods market in a diversifying Asia
By Rohit Razdan et. al., | McKinsey & Company | November 29, 2021
Asia is the world’s consumption growth engine; if you miss Asia, you could miss half of the global picture, a $10 trillion consumption growth opportunity over the next decade. Shifts and diversification in Asia’s consumer landscape offer new opportunities for consumer packaged goods (CPG) players. Eight growth angles in the region are.
- The average size of households has declined in most Asian countries over the past 20 years—for example, by around 10 percent in Indonesia and almost 30 percent in China. Almost one-third of households in Advanced Asian economies and more than 15 percent in China are already single-person ones. As a result, a robust “singles economy” is emerging.
- The population of Asian seniors is expected to grow by around 40 percent over the next decade, from 575 million to more than 800 million. Furthermore, seniors’ consumption may grow twice as fast as that of the rest of the population in many Asian countries. And they are becoming increasingly adapting to online consumption.
- Women’s economic empowerment could bring 30 percent, or $3 trillion, to Asia’s consumption growth in the period to 2030. This may unlock new opportunities. Many are in the making for instance, according to Tmall in China, one of Alibaba’s e-commerce platforms, 80 percent of the top new brands that emerged in 2020 were focused on the needs of women.
- Digital natives (people born between 1980 and 2012, including members of Generation Z and millennials) are expected to account for 40 to 50 percent of Asia’s consumption by 2030. While there are variations across countries, these cohorts share some common attitudes toward brand preference and discovery. For example, they are, unsurprisingly, voracious online content consumers; many of these consumers are harder to convince and influence; and they exhibit lower brand loyalty and are eager for new experiences.
- Increasingly, digitized business-to-business platforms (eB2B) are replacing established flows, and the shift toward e-commerce continues. In the process, these shifts are carving out new value chains. Value is shifting among players.
- Consumers in Asia are increasingly eco-conscious. In recent surveys, the vast majority of Asian consumers have indicated their willingness to pay a premium for sustainable packaging alternatives.
- Asian consumers appear relatively willing to share their data. As a result personalization of marketing communications and services is becoming an increasingly important competitive differentiator.
- Asian CPG brands account for a large share of the region’s consumer spending but have struggled to cross borders. Local brands have controlled the highest market share of their respective markets in 2019 with few exceptions where non-Asians control the markets.
3 key takeaways from the article
- The Asian consumer landscape is being reshaped.
- Important trends are: across Asia, households are getting smaller, the population of Asian seniors is expected to grow by around 40 percent over the next decade, women’s increased economic empowerment could bring $ 3 trillion growth, digital natives are expected to account for 40 to 50 percent of Asia’s consumption by 2030, increasingly digitized business-to-business platforms, increasingly eco-conscious consumers, right attributes to propel the spread of personalization, and Asian CPG brands account for a large share of the region’s consumer spending
- Three key actions companies may need to consider to compete successfully in the next decade of serving Asian consumers are: redraw your growth map, open up and manage partnerships, and reallocate resources with agility.
Topics: Asia, Consumer Packaged Goods, Global Economy
How Direct-to-Consumer Brands Can Continue to Grow
By V. Kasturi Rangan et al., | Harvard Business Review Magazine | November–December 2021 Issue
Success stories of direct-to-consumer (DTC) business led to the burgeoning of upstart DTC brands. As of 2018, Inc. magazine reported, more than 400 of them had sprung up. Since then the number has continued to grow. At the peak of this hype, the Interactive Advertising Bureau announced the advent of a “direct brand economy.”
Much of what they achieved early on was possible because they challenged traditional marketing principles and chose new avenues for customer acquisition and distribution. Marketing principles may be bypassed some of the time, especially when entering a new market, but they cannot be ignored all the time—and especially not when trying to scale up a profitable business. As they have faced new challenges, DTC brands have had to reevaluate the direct-to-consumer model and adapt their strategies to remain successful in a field of aggressive and diverse rivals. As DTC brands continue to scale up, they should keep four principles in mind.
- Focus on deepening customer relationships, not just making comparisons with competitors. Negative comparison with rivals can serve a purpose in the initial stages of a brand’s introduction to the market, but eventually, the brand must develop its own identity.
- Accompany the customer beyond the initial transaction. Although few entrants have the deep pockets to lead with revolutionary product innovation, they have a process-innovation advantage that incumbents can’t match. They can accompany their customers all along the decision journey, following through on product use and experience after a sale. The brands should actively use the resulting insights to spur innovation, strengthen the value chain beyond the initial transaction, and deliver satisfaction at every possible touchpoint.
- Omnichannel is about value addition, not cost reduction. It provides important presale or postsale services such as inspecting, fitting, repairing, or upgrading which is symbiotic and furthers the DTC brand mission.
- Strengthen the core first; consider extensions later. Product line extensions are a great way to increase order sizes and keep customers coming back for more. But many brands routinely make them without first ensuring that the core value proposition is on a sound footing. Brands must be careful with extensions: Sometimes they have a tendency to creep over into items that don’t connect well to the core product.
3 key takeaways from the article
- The burgeoning of upstart DTC brands as of 2018, Inc. magazine reported, more than 400 of them had sprung up pushed the Interactive Advertising Bureau to announce the advent of a “direct brand economy.”
- The potential for DTC brands to steal market share from incumbents has inspired venture capitalists to invest $8 billion to $10 billion in them since the start of 2019.
- But the success of these brands has inspired intense competition from incumbents and new entrants. As DTC brands continue to scale up, they should keep four principles in mind: focus on deepening customer relationships, not just making comparisons with competitors, accompany the customer beyond the initial transaction, omnichannel is about value addition, not cost reduction, strengthen the core first; consider extensions later.
Topics: Marketing Strategy, Director-to-Customers, Competition, Business Model
Use Networks to Drive Culture Change
By Peter Gray et al., | MIT Sloan Management Review | November 30, 2021
Organizational culture is notoriously difficult to change, in part because it reflects people’s values — their deeply held beliefs about what is good, desirable, and appropriate. Relationships can complicate matters further. When colleagues are embedded in informal networks with others who share and reinforce their values, they often become entrenched rather than open to new attitudes and behaviors. But it doesn’t have to be like that. Those same networks can also help leaders identify and overcome obstacles to cultural change and discover unexpected allies. Based on their research, the authors have identified five ways to drive culture change through informal networks.
- Unearth the Subcultures. In addition to organizational culture subgroups like functions, divisions, or geographies have their own cultures. Leaders who can see the diversity of values that exist in different cultural subnetworks can take much more precise action to support or change these subcultures.
- Find Your Real Cultural Leaders. Formal leaders do facilitate culture change, of course, but the authors’ work reveals that they don’t do it alone. Informal influencers deep inside the organization are critical — but often hidden — enablers of change. Enlisting their help is far more efficient than taking a top-down approach. When an organization resists change, informal influencers can form the nucleus of broad-based movements that may succeed where top-down approaches are likely to fail.
- Shine a Light on Hidden Tensions. Leaders of change efforts have long been counseled to form a powerful guiding coalition that can address employee resistance. But that’s easier said than done. Small, hidden disagreements throughout an organization have a way of slowly and quietly killing change initiatives — the proverbial death by a thousand cuts. Analyzing network and cultural data can bring these tensions to light so leaders can manage them.
- Evoke Positive Emotions. Traditional approaches to cultural change often assume that the process is rational. But the authors’ research shows that culture spreads most effectively through network connections that have an emotional aspect. In particular, people who prompt positive emotions in their colleagues excel at getting others to adopt desired cultural values.
- Give Adoption the Time It Needs
3 key takeaways from the article
- Organizational culture is notoriously difficult to change, in part because it reflects people’s values — their deeply held beliefs about what is good, desirable, and appropriate. Informal networks with others who share and reinforce their values, they often become entrenched rather than open to new attitudes and behaviors.
- Those same networks can also help leaders identify and overcome obstacles to cultural change and discover unexpected allies.
- Combining network analysis with assessments of organizational culture provides leaders with a rich understanding of how new values take root. It gives them a more “local” view of culture — one where desired behaviors are communicated, modeled, observed, and adopted on the ground, not broadcast from on high.
Topics: Organizational Behavior, Change, Culture
How to Know If a Business Accelerator Is Right For You and Your Company
By Entrepreneurs Organization | Inc Magazine | December 4, 2021
Embarking on your accelerator journey feels like a leap of faith. As a solopreneur, if you are looking to take your business to the next level, joining an accelerator program could help you to take this leap of faith, despite your company’s humble beginnings. An entrepreneur shared her three pieces of advice while thinking about activating the accelerator option.
- Identify what’s holding you back. If these obstacles revolve around specific pain points (pricing strategy, contract agreement, internal KPIs, or processes), you may find solutions through readily available resources or subject matter experts and here joining an acceleration program could help.
- Determine your growth needs. If these needs are general in nature (strategic planning, hiring practices, or cash flow management), accelerators are ideal as they provide a wide array of learning opportunities. However, if your needs are very specific (e.g., international expansion, M&A, or an industry niche), you may want to research more targeted programs.
- Assess your learning style. Some learn better with a concrete roadmap telling them what to do every step of the way. Others learn best by hearing other people’s experiences and adapting that learning to their own circumstances. Choose a business accelerator program that suits your learning style.
2 key takeaways from the article
- Embarking on your accelerator journey feels like a leap of faith. As a solopreneur, if you are looking to take your business to the next level, joining an accelerator program could help you to take this leap of faith, despite your company’s humble beginnings.
- Three key questions you need to answer before considering the accelerator option: are the obstacles you are facing revolve around specific pain points (pricing strategy, contract agreement, internal KPIs, or processes), are your growth needs general in nature (strategic planning, hiring practices, or cash flow management), and can understand your learning style and choose a program accordingly.
Topics: Entrepreneurship, Startups, Accelerator
6 Ways To Promote Your Business Without Social Media In The #DeleteFacebook Era
By Mei Mei Fox | Forbes Magazine | December 7, 2021
Social media will provide holiday purchase inspiration for 87% of Gen Z shoppers this year. And yet many of us have become wary of social media in 2021 – one evidence is #DeleteFacebook movement which is gathering steam. That may all be well and good for a massive company. But quitting social media is a lot trickier for smaller brands, which rely heavily on these platforms for promoting brand awareness and making sales. Here are six ways the experts say you can promote your business and build your brand loyalty without relying on social media.
- Email Marketing Campaigns. In a recent article for The Atlantic, Dave Pell, author of the extremely popular newsletter Nextdraft, calls email “the unkillable app.” Mailchimp campaigns alone, he says, drove more than $64 billion in revenue in 2020.
- Event Sponsorships. Events always have gifts or product bags that they give away to attendees. Or planning your own event with your product or service integrated into the promotions is another great way to gain exposure and attract new clients for your business.
- Search Engine Marketing and SEO. A great place to start is by building credibility and capturing active intent with a robust Search Engine Marketing (SEM) program. Opting for SEO would not be enough. Today owning the SERP (search engine results page) demands attention to both i.e., SEO and paid search.
- Streaming Platform Content. As consumers continue their steady march away from linear television, they are replacing that time with longer video and audio content that can be made available through Youtube, Spotify, Telegram, Discord, Reddit, Twitter Spaces, and other platforms. This has opened a window for businesses to create compelling and informative content, building passionate communities around brands where they feel like they know someone who works there personally.
- Mobile App Creation. Creating authentic, engaging content from your brand on your website and through a mobile app is a great way to reach your audience.
- Sponsored Ads on Retail Websites. One exciting channel that immediately levels the playing field between more established brands and smaller ones is sponsored ads on retailer and marketplace websites. These are essentially digital point-of-purchase displays that engage shoppers as they shop.
3 key takeaways from the article
- Social media will provide holiday purchase inspiration for 87% of Gen Z shoppers this year. And yet many of us have become wary of social media in 2021 – one evidence is #DeleteFacebook movement which is gathering steam.
- That may all be well and good for a massive company. But quitting social media is a lot trickier for smaller brands, which rely heavily on these platforms for promoting brand awareness and making sales.
- Six ways the experts say you can promote your business and build your brand loyalty without relying on social media are: Email Marketing Campaigns, Event Sponsorships, Search Engine Marketing, and SEO, Streaming Platform Content, Mobile App Creation, and Sponsored Ads on Retail Websites.
Topics: Entrepreneurship, Social Media, Marketing
Improve Your Time Management With Time Blocking
By Howie Jones | Entrepreneur Magazine | December 5, 2021
Failure to effectively manage your time can be a significant source of anxiety. So, how do you better manage your time to achieve more significant results? Using the time blocking strategy is the best way to address this topic.
Time blocking is the process of arranging your day’s schedule ahead of time by allocating specific tasks and obligations to each hour of the day. It’s similar to making a to-do list, except you know exactly when to do what. As a result, it’s a more focused type of to-do list that works wonders for getting things done more efficiently. How do you get the most of this technique – three steps?
- Make a list of your tasks and prioritize them. If you genuinely want the time-blocking strategy to function, you must prioritize your tasks. This is because the primary goal of employing this method is to improve time management. This means you won’t have to waste time deciding which one to tackle first. This is when prioritization comes into play. You can determine which chores in your calendar require greater attention by recognizing the key ones. Putting these duties in the middle of your day is a wonderful method to handle them. For other people, prime time will be different. Your prime hour is when you feel most productive during the day.
- Make a copy of your schedule. Don’t put this off. Another crucial suggestion for making the time blocking strategy work is to create a daily blueprint. With the advancement of technology, you may be tempted to make your calendar using online apps and tools and then consult it on your phone or computer. However, if you truly want to increase your productivity, print your schedule and set that schedule right in front of you on your desk.
- Make time for minor tasks as well. You may not think it is necessary to schedule time for trivial tasks. Unfortunately, this is a common blunder that most of us commit. If you don’t set aside time for the less essential chores, you’ll end up using the time set aside for the major jobs to finish the smaller ones.
3 key takeaways from the article
- Failure to effectively manage your time can be a significant source of anxiety. So, how do you better manage your time to achieve more significant results?
- Using the time blocking strategy is the best way to address this topic. Time blocking is the process of arranging your day’s schedule ahead of time by allocating specific tasks and obligations to each hour of the day. It’s similar to making a to-do list, except you know exactly when to do what.
- How do you get the most of this technique – three steps: make a list of your tasks and prioritize them by specifying time, make a copy of your schedule and keep a hard copy on your table, and make time for minor tasks as well.
Topics: Time Management, Productivity, Personal Development