Extractive summaries of and key takeaways from the articles curated from TOP TEN BUSINESS MAGAZINES to promote informed business decision making | Week 225|December 31, 2021 to January 6, 2022
Which economies have done best and worst during the pandemic?
The Economist | January 1, 2022
The speed of the economic bounce-back from the enormous recession of 2020 has taken many forecasters by surprise. Output across the 38 mostly rich OECD countries combined probably surpassed its pre-pandemic level a few months ago. The average unemployment rate across the club, at 5.7%, is in line with the post-war average. And aggregate household income, adjusted for inflation, is above its pre-covid level. The overall picture has been remarkably benign, even as several variants of the coronavirus have emerged. But it hides stark differences beneath. The pandemic has created winners and losers —and the dispersion between them is likely to persist in 2022.
In order to assess these differences, The Economist has gathered data on five economic and financial indicators— GDP, household incomes, stockmarket performance, capital spending, and government indebtedness—for 23 rich countries. Some countries remain in the economic pits, while others are faring better than they were before the pandemic on almost every measure. Denmark, Norway, and Sweden are all near the top, and America has also performed reasonably well. Many big European countries, however, such as Britain, Germany, and Italy, have fared worse. Spain has done worst of all.
The spread of the Omicron variant is likely to curtail growth in early 2022. But the economic recovery is still likely to continue over the year, and the overall picture will probably mask variation again. The OECD expects some of the worst performers to start catching up. But the laggards have a long way to go. By the end of next year, the OECD expects the combined GDP of our three highest-ranked countries to be 5% higher than its pre-pandemic level. Output for the three worst performers, meanwhile, is expected to be just 1% higher than it was before covid-19. The uneven effects of the pandemic, in other words, will endure.
3 key takeaways from the article
- The speed of the economic bounce-back from the enormous recession of 2020 has taken many forecasters by surprise. Output across the 38 mostly rich OECD countries combined probably surpassed its pre-pandemic level a few months ago.
- The overall picture has been remarkably benign, even as several variants of the coronavirus have emerged. But it hides stark differences beneath.
- The pandemic has created winners and losers —and the dispersion between them is likely to persist in 2022.
Topics: Global Economy, COVID-19, Recovery
Data sharing and ally-shoring: Global problems require collaborative solutions
By Sanjay Brahmawar | Fortune Magazine | December 28, 2021
The pandemic has first and foremost been a human disaster, but it has also exposed the fragility of global systems and supply chains by uncovering hidden bottlenecks. Data sharing and ally-shoring are two measures to get these systems back on track and to help tackle the worldwide environmental, economic, political, and societal issues we face now and in years to come.
International collaboration comes to life once basic agreements on issues like data sharing are put in place. Every part of the world has different fields of expertise—and there is a tremendous opportunity to benefit from the knowledge of our international counterparts. For example, U.S. companies and regulatory bodies can learn from their European peers in the industrial domain and look at the development of rules like the EU’s General Data Protection Regulation (GDPR) or IoT (internet of things) security standards to ensure more robust data privacy. The practice of applying specific domain expertise—whether it’s in manufacturing, health care, or other areas—to universal problems shows the value of prioritizing outcomes over the competition, the elevation of an industry over the success of an individual company.
Countries can also build strategic relationships to optimize trade, supply chains, and more. Ally-shoring, a.k.a. friend-shoring, is the practice of sourcing essential goods and services from countries that share similar values and a commitment to transparent international trade. Like onshoring—the movement of manufacturing back within domestic borders—it has gained ground in recent years as a way to support the economy and circumvent rising foreign production costs. Ally-shoring can also be beneficial in times of crises, such as the ongoing semiconductor shortage or the Suez Canal blockage which held up an estimated $9.6 billion of goods.
Global economies have taken significant steps toward forging alliances that spread common market values and industrial leadership, but there is more work to be done in terms of international collaboration. Data sharing concerns and competitive mindsets must be overcome for global markets to partner on mitigating universal challenges.
2 key takeaways from the article
- The pandemic has first and foremost been a human disaster, but it has also exposed the fragility of global systems and supply chains by uncovering hidden bottlenecks.
- Data sharing and ally-shoring are two measures to get these systems back on track and to help tackle the worldwide environmental, economic, political, and societal issues we face now and in years to come.
Topics: Global Economy, Supply Chain, Data
How Incumbents Survive and Thrive
By Julian Birkinshaw | Harvard Business Review Magazine | January–February 2022 Issue
The prevailing narrative in business today is one of ever faster change and creative destruction: Big Tech companies are taking over, the number of unicorns keeps growing, the average tenure of old-economy companies on the S&P 500 is plummeting, and incumbency has never been worthless. The message to established firms—play catch-up or die—is bleak.
But let’s look at the bigger picture. The internet revolution started in the mid-1990s, a quarter-century ago, long enough for the winds of change to work their way through the whole economy. So how many of today’s Fortune 500 didn’t exist back in 1995? Seventeen. The other 483 have been around, in some shape or form, since that year. When you look at the Global 500, the picture is similar. Digital disruption is real, of course, but it has been oversold by three myths: every sector is under threat, disruption happens quickly and is accelerating, and established firms are struggling to adapt. The study shows that the only sectors seeing significant churn were TMT (technology, media, and telecom) and retail (which includes restaurants and hotels).
A look at the strategies pursued by the Fortune 500 and Global 500 firms that successfully navigated the past 25 years of digital change reveals four general approaches.
- Fight back. The default reaction to disruption, again, is to try to take on an insurgent at its own game. Fighting back is appropriate if the new technology represents an existential threat to the firm, but that isn’t true very often. Moreover, it’s extremely hard to do well, established firms have a poor track record overall when it comes to beating upstarts at their own game.
- Double down. An established firm plays to its existing strengths. Assets like a trusted brand, and long-term relationships create entry and mobility barriers that are extremely hard for new entrants to overcome.
- Retrench. This is a defensive move—based on weakness, not strength—in which established firms yield ground to new arrivals and use a variety of tactics to ensure their own continued survival. One such tactic, commonly seen in declining industries, is consolidation through mergers and acquisitions. Another tactic is to seek help from the government and regulators in putting additional constraints on new entrants.
- Move away. Here the established firm simply migrates to new opportunities.
3 key takeaways from the article
- Digital disruption is real, of course, but it has been oversold by three myths: every sector is under threat, disruption happens quickly and is accelerating, and established firms are struggling to adapt. The facts suggest otherwise. There has been less creative destruction than prior studies have suggested—indeed, less than most people believe.
- Since the introduction of the internet in 1995, only seventeen Fortune 500 firms didn’t exist before 1995. 483 firms have been around, in some shape or form since that year.
- A look at the strategies pursued by the Fortune 500 and Global 500 firms that successfully navigated the past 25 years of digital change reveals four general approaches: fight back, double down, retrench and move away.
Topics: Creative Destruction, Disruption, Technology, Strategic Planning
Six Ways Leaders Can Adapt to the Workplace of 2022
By Ally MacDonald | MIT Sloan Management Review | December 28, 2021
MIT Sloan Management Review turned to some of its contributors from the past year with a question: What key change must managers make to adapt to the workplace of 2022? Six suggestions are:
- Embrace Inclusive Leadership. Be more inclusive in your leadership. At its core, inclusive leadership means that leaders commit to ensuring all team members are treated equitably. Most importantly, it’s about providing the resources and the support necessary so that people can reach their full potential.
- Cultivate Better Collaboration for Teams. As we move into an increasingly hyperconnected and hybrid world of work, managers will need to intentionally craft team and unit networks that drive performance, innovation, and engagement. Increasingly, performance will be delivered through networks that form more rapidly and effectively inside and outside of these efforts. Managers will need to improve how they cultivate these networks.
- Be Curious About What You Don’t Know — and Create Space for Dialogue. We’re seeing a fascinating shift. Increasingly, employees expect managers to take activist roles in areas such as climate change, and gender equity. Managers need to dialogue with the people which requires humility, an appreciation of power and how to exercise it, and an insatiable curiosity about what we don’t see and know.
- Prevent Bias From Hindering Employee Growth. Proactively combat the “out of sight, out of mind” bias. This tendency makes it easy for managers to unintentionally measure and reward access instead of performance. One way to counteract this bias is to rather than delegating tasks or offering growth opportunities to the first person who comes to mind, managers should write down each team member’s name and then review the list (twice!) to determine who is actually best suited for what they have in mind.
- Foster Respect by Building Connections. In addition to paycheck people also need to feel respected, valued, and acknowledged, and this comes down to how we relate to one another as individuals. Positive interpersonal relating is at the core of our sense of self. The most successful managers will be those who demonstrate genuine curiosity about what employees find meaningful. And it can start with five words: “Tell me what you think.”
- Empower Peer Coaching and Leadership on Teams. Many of the social and emotional needs can be helped through peer relationships and support, allowing managers to prioritize team needs without burning out. Peers are better able to express empathy and compassion, solve problems, and make the time. As a manager, rather than solving for the need, set up the systems to help your team help each other.
3 key takeaways from the article
- MIT Sloan Management Review turned to some of its contributors from the past year with a question: What key change must managers make to adapt to the workplace of 2022?
- Six suggestions are: Embrace Inclusive Leadership, Cultivate Better Collaboration for Teams, Be Curious About What You Don’t Know — and Create Space for Dialogue, Prevent Bias From Hindering Employee Growth, and Empower Peer Coaching and Leadership on Teams.
Topics: Leadership, Organizational Behavior
Follow The Science? Business Decisions And Technical Advice
By Bill Conerly | Forbes Magazine | January 01, 2022
The 2020 lockdowns illustrate the challenges of “following the science” within a narrow specialty. Covid-19 is a dangerous and highly infectious disease, so isolation makes sense as a policy response—when considered by itself. But what about the rest of the science, which says that social isolation is bad for health and that delaying routine health screenings and treatments can lead to more deaths? Following the science would have required much broader studies that extended well beyond the single virus.
A business example of the need for broad views might be an engineering opinion that a new manufacturing process will result in more defective products. Some engineers may find this sufficient cause for management to reject the process. However, that approach attempts to extend the expert opinion beyond the range of its validity. Suppose that the business manager knows that defective parts can be identified easily, and that production costs will be lower even after subtracting the defective parts. A narrow “follow the science” approach rejects the new process, but the broader analysis—extending beyond engineering expertise—may lead to a different and better conclusion.
Scientific advice for health issues sometimes imposes the scientists’ value of risk versus reward, which is not actually part of science. Smoking tobacco is clearly hazardous to health—that’s the science—but smokers get some pleasure from their cigarettes. Science can identify how much risk the smokers are taking, but nobody can judge for another human being how much risk is acceptable for a sense of pleasure.
Science skepticism may arise from people familiar with how scientific beliefs have changed over time. Science is actually a process of knowledge discovery rather than a set of conclusions. And the current conclusions may not be accurate.
The non-expert has little hope of identifying which current beliefs, whether in science, engineering, accounting or other fields, will eventually be overturned. However, the non-expert can get an idea of how reliable are the opinions being heard. The business leader might ask the expert, “Is your opinion mainstream, or are there experts in your field who would disagree with you?” This is actually information that an expert should volunteer.
Decision-makers can also ask the expert how sure other experts are about the conclusion. The range of opinions also offers insight into the extent of certainty. When epidemiologists differ greatly in their predictions, that tells the rest of us not to take the numbers too seriously. Such a conclusion is not an insult to epidemiologists, but rather an understanding of the difficulty of the task they have undertaken.
3 key takeaways from the article
- Nobody knows everything, so many business decisions rely on expert opinions. Executives listen to scientists, lawyers, accountants, engineers, and many other specialists. How skeptical should decision-makers be about expert advice?
- The Covid-19 pandemic has raised many questions about “follow the science” and scientific skepticism.
- A narrow “follow the science” approach rejects the new process, but the broader analysis—extending beyond the area—may lead to a different and better conclusion.
Topics: Decision-making, Uncertainty, Science
8 Ways Your Business Startup Strategy Should Parallel the Military’s
By Martin Zwilling | Inc Magazine | December 26, 2021
Many of you may not think of it this way, but penetrating a target market with your startup is a lot like a military invasion. Some key strategy elements the author sees highlighted by the military are:
- Gather your intelligence on where and when to hit first. Too many entrepreneurs push their product out without the proper scouting on high return or weak points in the existing market. They assume their innovation will overwhelm any competition, anywhere. The old adage of “location, location, location” could mean your city, or another country.
- Focus on one key objective rather than a broad global win. We all start with limited resources, so don’t try to win over everyone with the initial charge. A broad attack will likely confuse potential customers and will spread your resources too thin to satisfy any. There is always time for broadening, or scaling your focus to pick up additional segments.
- Capitalize on territory the competition has not penetrated. Use your new features or innovation to quickly get a foothold in the market. Be realistic with your intelligence gathering to find pockets of real interest, rather than assuming that “everyone wants one” of what you have to offer.
- Line up your resources and training before you roll out. Some entrepreneurs think they can do it alone or can learn on the fly. It takes a team to run a business, with the tools and training to handle any skirmishes.
- Marshall friendly forces within the territory for support. Smart entrepreneurs use social media and influencer advocates within the target market to build momentum and provide direction and support, even before they are ready to attack. In today’s age of communication, customers look to friendly forces to find a new invader they trust.
- Aim for competitor vulnerabilities and premier opportunities. Initial penetration and success are what you need to convince mainstream customers to switch or try your new solution. Don’t be afraid to pivot or adjust your attack as you see weaknesses in competitive offerings or major customer opportunities that you didn’t anticipate.
- Build collaborative partnerships with potential competitors. Many entrepreneurs forget about white-labeling and strategic supplier relationships as routes to customers and long-term leadership.
- Keep your eyes open and be ready to counter flank attacks. Charging into battle with blinders on, expecting no surprises or resistance, is foolhardy. Every smart entrepreneur reviews his strategy and progress with the team at least weekly, and reserves some resources for changes and counter-attacks. Be willing to take risks, but don’t be reckless.
2 key takeaways from the article
- Many of you may not think of it this way, but penetrating a target market with your startup is a lot like a military invasion.
- Eight key strategy elements the author sees highlighted by the military are: gather your intelligence on where and when to hit first, focus on one key objective rather than a broad global win, capitalize on territory the competition has not penetrated, line up your resources and training before you roll out, marshall friendly forces within the territory for support, aim for competitor vulnerabilities and premier opportunities, build collaborative partnerships with potential competitors, and keep your eyes open and be ready to counter flank attacks.
Topics: Startup, Marketing Strategy, Competition
4 Trends that Will Reshape the Small Business Landscape in 2022 and Beyond
By Rich Rao | Entrepreneur Magazine | January 2, 2022
As we head into 2022, we see the impacts of the past two years crystallizing and new trends emerging, like the beginnings of the metaverse to changing how we define small businesses and how small businesses operate — online, offline and in-between. The author along with one of his collegues at Meta identified four trends that will reshape the small business landscape in 2022 and beyond.
- The evolution of entrepreneurship. One fortunate byproduct of the pandemic was an outpouring of creativity. Around the world, people reexamined previously held assumptions — like the need to conduct some business exclusively in-person — and new, exciting ideas and businesses were born. This effectively redefined what it means to be an entrepreneur, adding more diversity to the small business space. In 2022, this trend will accelerate further as a record number of businesses are forecasted to be started.
- The art and science of creativity. Over the last two years, small business owners have had no choice but to become increasingly creative with their digital presence. And for many, this opened new doors for driving sales and building their brand in the process. For many, the beauty of fun live video combined with the convenience of online shopping has opened up new revenue streams that will persist beyond the pandemic.
- Messaging paves the way for the next era of communication. In this digital era, 75% of adults globally say they want to communicate with businesses via messaging, in the same way they communicate with friends and family. As we transition from the mobile Internet to the Metaverse, we know we’ll see businesses large and small working with more immersive formats to forge personal connections online.
- Bridging the physical/digital divide. Many businesses are now operating in a hybrid model — meaning they’re maintaining a physical presence while also selling via ecommerce platforms that became a necessity during the pandemic. In a way, we see the pandemic having accelerated what ‘digital’ actually means, and as a result, there is no longer a binary divide between online or offline or digital and non-digital. Figuring out how to balance and maintain both in-person and digital experiences, and infusing the two experiences together will ensure small businesses are reaching the largest possible customer base, not restricting them based on their geographical footprint, while also providing the convenience that local customers desire.
2 key takeaways from the article
- As we head into 2022, we see the impacts of the past two years crystallizing and new trends emerging.
- Four trends that will reshape the small business landscape in 2022 and beyond are: the evolution of entrepreneurship, the art and science of creativity, messaging paves the way for the next era of communication, and bridging the physical/digital divide.
Topics: Entrepreneurship, Innovation, Creativity