Weekly Business Insights – Week 224

Extractive summaries of the articles curated from TOP TEN BUSINESS MAGAZINES to promote informed business decision making | Week 224|December 24-30, 2021

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Shaping Section : Ideas and forces shaping economies and industries

The battle of the computing clouds is intensifying

The Economist | December 18, 2021

How much have you spent on the cloud today?  Every firm of any size will need to understand not just the benefits of the cloud, but also its costs. Gartner, a consultancy, calculates that spending on public cloud services will reach nearly 10% of all corporate spending on information technology in 2021, up from around 4% in 2017. 

For cloud companies, this has been a bonanza. Giants of the industry, such as Amazon Web Services (AWS), Microsoft Azure, Google Cloud Platform and, in China, Alibaba and Tencent, have been adding business briskly. Global sales of cloud services to rise by 26% in 2021, to more than $400bn. But competition is stirring.  

Businesses’ main motive for moving to the cloud was never about cost but “scalability”: having access to additional computing resources with a few clicks. But cloud bills have grown more complicated as well as higher, sometimes rivaling those from America’s notoriously opaque healthcare providers. The AWS bill of even a small customer like the Duckbill Group, another cost-consulting firm, can run to more than 30 pages, listing in detail the cost of every single service it has used.

Big cloud providers such as AWS, Azure and GCP are amalgamations of dozens of services. AWS sells more than 200, ranging from simple storage and number-crunching to all sorts of specialised databases and artificial-intelligence offerings. Each is billed according to multiple dimensions, including the number of servers, time used, or bytes transferred.  The three big providers also have a habit of making it cheap and easy to transfer data onto their clouds but pricey to move them out again.  Locking customers in like this may push them to use other services.  These may push the organizations to think about building their own private clouds to keep costs down. So far few firms have opted for such “repatriation”, which is both pricey and makes it harder for businesses to enjoy the benefits of essentially unlimited computing resources in the public cloud.

3 key takeaways from the article

1. Every firm of any size will need to understand not just the benefits of the cloud, but also its costs. According to one estimates spending on public cloud services will reach nearly 10% of all corporate spending on information technology in 2021, up from around 4% in 2017.  And it has become more complicated.
2. For cloud companies, this has been a bonanza. Giants of the industry, such as Amazon Web Services (AWS), Microsoft Azure, Google Cloud Platform and, in China, Alibaba and Tencent, have been adding business briskly. Global sales of cloud services to rise by 26% in 2021, to more than $400bn. 
3. Cloud providers’ fat gross-profit margins are also attracting competition.

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Topics:  Technology, Cloud Computing, Competition

How Asia can boost growth through technological leapfrogging

By Oliver Tonby et. al., | McKinsey & Company | December 2, 2020

Asia’s initial response to the COVID-19 pandemic in 2020 was partly enabled by technological foundations developed long before the crisis. Over the past decade, the region has developed and deepened its technological capabilities and infrastructure rapidly, accounting for a large share of global growth in technology companies, revenue start-up funding, spending on R&D, and patents filed.

Asia’s potential to build further technological strength can be gauged from the fact that of 33 technologies analyzed, Asia leads start-up investment in 11, IP creation in ten, and both start-up and IP creation in four.  Asia has a high share of both patents and start-up investment in Mobile services, Artificial Intelligence, the Internet of Things (IoT), and Manufacturing equipment.  China and India are home to more than two-thirds of urban technology hotspots. On three dimensions of technology output—technology company revenue, number of unicorns, and number of patents— the report identified 50 Asian technology hotspots. Sixty-eight percent of them are in China and India, but most other Asian countries have at least one hotspot city, typically the capital.

Four leapfrogging opportunities stand out: 

1. Accelerated consumer demand and its digitization.  Asia accounted for 41 percent of global consumer demand in 2018 and is expected to represent 56 percent of global growth in that demand between 2018 and 2030.
2. Strong large manufacturing companies.  On average, Asian companies contributed 41 percent of the revenue of the world’s top 5,000 companies—the G5000—between 2016 and 2018. In sectors including capital goods and information technologies, the share of global G5000 revenue from Asian companies was even higher, at 48 and 49 percent, respectively.
3. Expanding business technology services.  Demand for digital services is soaring, and Asia’s strong talent base suggests that the region can develop considerable strength in this area. 
4. Being at the forefront of the energy transition.  Strong policy support from Asian governments is an important catalyst for the adoption of technology and has helped the region catapult into an even stronger position on a range of renewable energy sources.

In the COVID-19 era, three attributes appear to be vital to corporate success: speed, collaboration and resilience.  Asia already has strengths in all three on which it can build.

3 key takeaways from the article

1. Over the past decade, the region has developed and deepened its technological capabilities and infrastructure rapidly, accounting for a large share of global growth in technology companies, revenue start-up funding, spending on R&D, and patents filed.
2. Four leapfrogging opportunities stand out:  accelerated consumer digitization, strong large manufacturing companies, expanding business technology services, and being at the forefront of the energy transition. 
3. In the COVID-19 era, three attributes appear to be vital to corporate success: speed, collaboration and resilience.  Asia already has strengths in all three on which it can build.  However, tariff and data flow barriers, standards, export controls, and research barriers pose new risks. Moreover, Asia still needs to overcome gaps in core capabilities.

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Topics:  Asia, Global Economy, Technology, Manufacturing

Leading & Managing Section

Finding the Right CEO

Harvard Business Review Magazine | In January–February 2022

The best stepping-stone to the corner office is changing. The vast majority of new CEOs still come from within: For example, in 2020, 77% of new S&P 500 CEOs were internal promotions. But whereas 20 years ago chief operating officers were the overwhelming favorites, accounting for 76% of such appointments, they have lost significant ground and look to be overtaken soon by another group of aspirants: division heads.   The waning numbers of COOs tapped for the top job reflect changing strategic priorities.  The role of COO was popularized in the 1990s as a result of management trends around quality.  But in recent years companies have become flatter, and power has moved from functions to business units. What’s more, boards have come to prioritize experience running a full P&L. 

Company performance vs a vs to the root of the CEO shows interesting insights.  The least-common choice, the leapfrogs, had the highest share of CEOs in the top quartile for performance: 41%. Former division heads and COOs were next, at 27% and 25%, while the share of CFOs in the top quartile of performers was only 8%.   Although the researchers didn’t quantitatively analyze reasons for leapfrogs’ superior performance, they have some theories based on follow-up interviews and their consulting experience. In assessing candidates—even at the CEO level—it’s often better to value skills and ability over experience.

Development opportunities for leaders in each of the stepping-stone roles could be: COOs can best position themselves for success by building a following across the organization and being more visibly present to the broader workforce, and division heads should expand their vision and understanding of the business at the enterprise level by, for instance, volunteering for companywide projects. CFOs will probably benefit from gaining operating experience outside finance, while those in leapfrog positions should seek exposure to analysts, investors, board members, and other external stakeholders.

3 key takeaways from the article

1. The best stepping-stone to the corner office is changing. The vast majority of new CEOs still come from within but chief operating officers who were the overwhelming favorites are losing significant ground and look to be overtaken soon by another group of aspirants: division heads. 
2. However, leapfrog CEOs”—leaders appointed from one level below C-suite officers or division heads, with titles such as senior vice president and general manager—have the best odds of steering their firms into the top quartile of performers.
3. Development opportunities for leaders in each of the stepping-stone roles vary but the board should ensure that their search for new CEOs should be more expansive.

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Topics:  Personal Development, Organizational Behavior

Open Up Your Strategy

By Christian Stadler et al., | MIT Sloan Management Review | December 20, 2021

Formulating and executing sound organizational strategy is difficult work. Strategy is often made by elite teams and thus can be limited by their biases about competitors, customer needs, and market forces. And it can be an uphill battle convincing stakeholders across the company to channel money, time, and energy in a new and unproven direction.

At the core of this problem is the very process by which strategy is crafted. Strategic planning as practiced today is a tightly closed, secretive, and bounded process. Executives presume that keeping strategy to themselves keeps the company safe from employees or external contributors who would inject unschooled or unruly thinking, and from competitors who would steal their ideas. But they are wrong: The hoarding of strategy isn’t helping their companies. It’s killing them, in several distinct ways e.g., development of isomorphous (similar) strategies by competing organizations, unimaginative strategies, and biased strategies.  The authors’ suggested solution to both the strategy formulation and execution challenges is radical I.E., open up your strategy process. Doing so requires that leaders take the following five steps:

1. Make a commitment as a top leadership team to the idea that valuable strategic insights aren’t limited to the leadership team and consultants.
2. Introduce open strategy in businesses in Identify which businesses are already acting as disruptors and/or which ones face looming threats from disruption, and leave the current strategy process in place for the businesses which ones don’t face serious threats.
3. Set up new structures, and develop capabilities.
4. Amplify external voices, and balance them with internal voices.
5. Don’t treat open strategy as a fair-weather approach. Embracing open strategy across a large enterprise takes time, and it can be tempting to revert to old strategy-making ways, especially during tough times. This is a mistake: Open strategy can make its most meaningful contributions during disruptions. When you’re straining to see around the next corner, trust the power of the crowd.

3 key takeaways from the article

1. Strategy is often made by elite teams and thus can be limited by their biases about competitors, customer needs, and market forces. And it can be an uphill battle convincing stakeholders across the company to channel money, time, and energy in a new and unproven direction.
2. One solution to both the strategy formulation and execution challenges is to open up your strategy process. The open strategy offers leadership teams access to diverse sources of external knowledge they wouldn’t otherwise have, while also making individual leaders aware of their biases and helping them build the buy-in needed to speed up execution.
3. Involving people from outside the C-suite — and outside your company — in strategy-making not only provides a wellspring of fresh ideas but also mobilizes and galvanizes everyone involved.

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Topics:  Strategy, Strategic Plan

4 Ways To Strengthen Your Company’s Cybersecurity Infrastructure To Prevent An Attack

By Heidi Lynne Kurter | Forbes Magazine | December 24, 2021

Creating a strong cybersecurity infrastructure is becoming a top priority for businesses around the world. Since shifting to remote work, cybersecurity attacks have drastically increased costing businesses millions of dollars. An IBM 2020 report found that it takes a company an average of 280 days to identify an attack and contain it. This causes companies to experience disruption, limited operational ability, reputational damage, and legal consequences.  Most companies believe they’re not at risk because they don’t view their data as valuable. Thus, they overlook the importance of having cybersecurity measures in place. This ends up costing them more than what they would’ve spent if they proactively invested in a cybersecurity preventative plan.  Four ways companies can strengthen their cybersecurity measures to prevent an attack are:

1. Create A Backup Plan To Diversify Sensitive Information.  The majority of companies have moved from storing their data on-premise to implementing private cloud storage solutions.  While cloud services are a cheaper and more efficient alternative to storing data, companies need to ensure they have security measures in place with encryption protocols. Doing so makes hacking a laborious task that deters malicious actors from accessing company data. 
2. Prioritize And Increase Cybersecurity Efforts.  A common misconception companies have is that cybercrimes are only committed by external actors. However, data shows that 64% of cyberattacks come from internal sources. This is due to unauthorized individuals having access to privileged information, not being trained on how to recognize phishing attempts, a poor or nonexistent culture of cybersecurity, and cybercrimes not being taken seriously.  An effective cybersecurity plan isn’t the sole responsibility of the IT department. It’s the collective effort of everyone.
3. Evaluate Their Vendors And Third-Parties.  Companies should do their due diligence to ensure the vendors they work with have strong data privacy and security measures in place as well as a cybersecurity infrastructure.  When hiring a cybersecurity expert, companies should do their due diligence to verify that the individual they intend to hire is indeed qualified through certifications and experience. 
4. Build A Culture Of Cybersecurity.  Creating a culture of cybersecurity is a deliberate and intentional approach where every worker is aware of their responsibility in keeping the company secure.  It’s ensuring each employee is doing their part to prevent breaches, leaks, and attacks by training and educating workers on how to report threats and attacks, and keep equipment and devices secure.

3 key takeaways from the article

1. Creating a strong cybersecurity infrastructure is becoming a top priority for businesses around the world. Since shifting to remote work, cybersecurity attacks have drastically increased costing businesses millions of dollars. 
2. An IBM 2020 report found that it takes a company an average of 280 days to identify an attack and contain it. This causes companies to experience disruption, limited operational ability, reputational damage, and legal consequences.  
3. Four ways companies can strengthen their cybersecurity measures to prevent an attack are:  create a backup plan to diversify sensitive information, prioritize and increase cybersecurity efforts, evaluate your vendors and third-parties, and build a culture of cybersecurity.

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Topics:  Cyber Security, Data protection, Technology

How Shopify Outfoxed Amazon to Become the Everywhere Store

By  Brad Stone | Bloomberg Businessweek | December 22, 2021

Last February e-commerce company Shopify Inc. replaced the “Ottawa, Canada” dateline that began its press releases and earnings reports with a strange new one: “Internet, Everywhere.” The geographical shift came at the insistence of Shopify’s founder and chief executive officer, Tobi Lütke, who tends to view such matters through the prism of cold, hard logic. In May 2020, only a few months into the pandemic, he’d made the early, seemingly rash decision to terminate the leases on Shopify’s offices in Ottawa and six other cities, declaring that his entire 7,000-person workforce would remain virtual—forever.

The dateline thing may be a bit pompous and a little too cute, but after an almost two-year run that’s turned the quiet enterprise-tech company into a global e-commerce power. Since he started Shopify 15 years ago, the company has sold software that allows about 2 million merchants worldwide to run websites—free from the complicated embrace of Shopify’s chief rival, Amazon.com Inc. For $30 to $2,000 a month, Shopify offers sellers more than a dozen services to run an online store, from the actual e-commerce website to inventory management to payment processing.

What Zoom was to corporate America during the early days of the pandemic, Shopify was to small-business owners, many of whom had never sold a single product online until it became the only way they might stay alive. While Amazon’s reputation as a vampiric partner to merchants was reinforced in 2020 by sellers’ testimony in front of a congressional subcommittee investigating Big Tech, Shopify suddenly emerged as their biggest ally.  The global quarantine boosted the company’s market capitalization from $46 billion in early 2020 to $177 billion today. Now Canada’s most valuable company, it accounted for 8.6% of U.S. e-commerce sales in 2020, well behind Amazon’s 39% but ahead of Walmart and EBay.  

In a sense, Lütke and his colleagues are the opposite of Jeff Bezos’ army of techno-capitalists. Amazon will happily risk alienating small businesses by knocking off their products or soliciting new competition, if it means lowering prices and accelerating shipping times. Shopify, on the other hand, has a romantic view of the merchant—its executives rapturously extol the virtues of “democratizing commerce” and “making entrepreneurship cool.” If Amazon’s devotion to customers and an infinite selection earned it the nickname “the everything store,” Shopify, as its new dateline suggests, wants to be the everywhere store.

3 key takeaways from the article

1. Last February e-commerce company Shopify Inc. replaced the “Ottawa, Canada” dateline that began its press releases and earnings reports with a strange new one: “Internet, Everywhere.”
2. The dateline thing may be a bit pompous and a little too cute, but after an almost two-year run that’s turned the quiet enterprise-tech company into a global e-commerce power.
3. Since its start Shopify 15 years ago, the company has sold software that allows about 2 million merchants worldwide to run websites—free from the complicated embrace of Shopify’s chief rival, Amazon.com Inc – making it Canada’s most valuable company.

Full Article

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Topics:  E-commerce, Technology, Competition

5 Ways To Avoid Living in Fear in Business

By Daniel Todd | Inc Magazine | December 24, 2021

People naturally avoid what frightens them, in life and in business, but giving in to that fear–the “what ifs?” and worst-case scenarios–can be crippling. According to the author, in the last decade, he has learned to see obstacles to his success as opportunities to improve instead of falling prey to the thoughts and behaviors that may come out of fear.  The top five ways to avoid this fear in your business are:

1. Control your emotions.  Take control of a challenge by controlling your fears surrounding it.  Being afraid feels easier than trying to take control, but if you let fear get ahold of you, it blocks your mind from making the rational and logical decisions you need to overcome the challenge you’re facing. When you de-clutter your thoughts of fear, however, you think of solutions more easily.
2. Come up with a plan.  Even the best plans go awry, but instead of fearing failure when they do, reassess the situation and come up with a better plan. When you plan your way through enough challenges, you start to confront them with a different attitude. Even if some plans end up failing, you know that trying again is always an option.
3. Focus on things you can control.  The first challenge you overcome is the one you’re least prepared to handle, but in order to approach it without fear, focus on what you can control. Reassess what you assumed would work but failed and figure out what you can do about it. Give yourself the mental fortitude to muscle through any obstacle because something is always possible.
4. Be transparent.  It can be frightening to be honest about challenges, but transparency is the best policy. Admitting when your business is going through tough times is almost as hard as the tough times themselves.  We often fear that being transparent will make others see us as a failure, but if you make a bad situation sound better than it is, no one will know you need help. 
5. Involve people who can help you.  Find people with the means to help and lay the problem out for them straight. Once you identify someone willing to step up and support you during a struggle, nurture this relationship with continued transparency and keep them involved in your business–you never know when you might need them again.

3 key takeaways from the article

1. People naturally avoid what frightens them, in life and in business, but giving in to that fear–the “what ifs?” and worst-case scenarios–can be crippling.
2. The top five ways to avoid this fear in your business are:  control your emotions, come up with a plan, Focus on things you can control, be transparent, and involve people who can help you.
3. Challenges may be frightening, but life will always come with challenges, so embrace the opportunity to conquer them and emerge as someone better on the other side. It takes a few attempts at overcoming obstacles before you learn to appreciate them, but go forward knowing that they are both inevitable and surmountable.

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Topics:  Startups, Entrepreneurship, Success, Failure

5 Personal-Branding Trends to Pay Attention to in 2022

By Natasha Zo | Entrepreneur Magazine | December 21, 2021

As we approach 2022, it’s clear that a strong personal brand is a solid business asset.  More and more, entrepreneurs are also starting to see their personal brand as an investment that requires a consistent input of your time, money and energy for greater returns.  Take note of these five trends that will be important in the coming year.

1. Rise of new social platforms.  2021 showed everyone the holy trinity of Facebook, Instagram and Youtube is not all as invincible as we thought. In 2021, we’ve seen new social platforms gaining momentum. However, it does not mean you need to triple your marketing team and try to be everywhere. Find the platform and go deep on it, creating original content that best fits the platform’s format.
2. Time to take entertainment seriously.  The golden marketing rule says that your content plan should balance valuable educational content with entertainment and inspiration.  You don’t need to sign up for dance classes; just look at the products and services you offer from a different perspective. Think of fun comic situations your target audience experiences and turn them into short videos. And there’s good news: Those are meant to be made on the go and being imperfect is considered an advantage.
3. Make space for deeper (and longer) conversations.  We are used to hearing that attention span is getting shorter, yet the formats that offer a space for a bigger conversation seem to be gaining popularity. When you’re building a strategy for your personal brand in 2022, make sure you have a space for deeper conversations with your audience. It might be a podcast, Facebook group or weekly Instagram live.
4. Change “inspirational” to “relatable”.  The pendulum is swinging away from the perfectly polished image and inspirational content and towards solving problems in real life with the support of the community.  Being an opinion leader does not mean having it all figured out and showing your perfect “after” picture. The world is changing fast, and often your leadership is needed to ask the right questions or open up about challenges you and your company currently face.
5. Unite people around a cause and values.  Twenty years ago, your personal views on social issues had nothing to do with your professional skills. Today, they can easily become a deciding factor that would repel some potential clients while turning others into your true fans. Studies show four in five customers choose brands aligned with their personal values. The same applies to followers of your personal brand. Your values can motivate people to choose you over the competition. 

2 key takeaways from the article

1. As we approach 2022, it’s clear that a strong personal brand is a solid business asset.  More and more, entrepreneurs are also starting to see their personal brand as an investment that requires a consistent input of your time, money, and energy for greater returns.  
2. Five trends that will be important in the coming year: the rise of new social platforms, balance your valuable educational content with entertainment and inspiration, make space for deeper (and longer) conversations, change “inspirational” to “relatable”, and unite people around a cause and values.

Full Article

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Topics:  Personal Development, Marketing, Branding, Social Media