Weekly Business Insights – Week 228

Extractive summaries of and key takeaways from the articles curated from TOP TEN BUSINESS MAGAZINES to promote informed business decision making | Week 228|January 21-27, 2022

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Shaping Section : Ideas and forces shaping economies and industries

The future of technology

The Economist | January 22, 2022

Is there any limit to the ambition and hubris of big tech firms? There is a surge in vast new investment decisions at five of America’s biggest firms, Alphabet, Amazon, Apple, Meta and Microsoft—call them MAAMA. Together, they have invested $280bn in the past year, equivalent to 9% of American business investment, up from 4% five years ago.

Big tech wants to find the next big opportunity, and the Economists’ analysis of deals, patents, recruitment and other yardsticks shows that cash is flowing into everything from driverless cars to quantum computing. The shift reflects a fear that the lucrative fiefs of the 2010s are losing relevance, and the fact that tech’s titans are increasingly moving onto each other’s patches. So they are all looking to swoop into new territory.  They also have an eye on the history of technology, which is littered with once-dominant firms that were brought down not by regulators, but by missing the next big thing. These include Fairchild Semiconductor, IBM, and Nokia.  Hence, MAAMAS  spent the 2010s fortifying commanding positions.  Yet past performance is not indicative of future results, and now all of them are limbering up for whatever comes next.

The problem is that nobody knows what it will be. But it will probably involve new physical devices that will supersede the smartphone as the dominant means of connecting people to information and services.  And vast sums are being spent on designing specialized chips, and pursuing new approaches like quantum computing, to provide the processing power for whatever new devices emerge.  The MAAMAS’ other priority is creating software platforms that will allow them to extract rents, by drawing in users, and then relying on network effects to draw in even more.

Governments, rivals and billions of customers, who already fear these firms are too powerful, may be alarmed by all this. One view is that the companies’ large customer bases, and control of pools of data with which to train artificial intelligence (ai), give them an insurmountable advantage. Won’t the giants use that to squash rivals? Yet all these new areas look competitive for the time being. In addition to competition from the respective industry’s incumbents, for example from Valkswagen in autonomous cars, to startup; the temptation is for regulators to clamp down pre-emptively is on the rise both in USA and EU.  Yet a lighter touch is the best policy for the regulators.

3 key takeaways from the article

1. Is there any limit to the ambition and hubris of big tech firms? There is a surge in vast new investment decisions at five of America’s biggest firms, Alphabet, Amazon, Apple, Meta and Microsoft—call them MAAMA. Together, they have invested $280bn in the past year, equivalent to 9% of American business investment, up from 4% five years ago.
2. Big tech wants to find the next big opportunity, and the Economists’ analysis of deals, patents, recruitment and other yardsticks shows that cash is flowing into everything from driverless cars to quantum computing.
3. Nonetheless, the temptation is for regulators to clamp down pre-emptively is on the rise both in USA and EU.  Yet a lighter touch is the best policy.

Full Article

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Topics:  Technology, Technology Firms, Regulators

Beijing Winter Olympics Will Spotlight a Richer, More Confident China

Bloomberg Businessweek | January 20, 2022

For China, hosting the 2008 Summer Olympics was a chance to prove it could hold its own among the great global powers. When the world tunes in for the opening ceremonies of the 2022 Winter Olympics on Feb. 4, a very different China will be in the spotlight.

In 2008 the country had just surpassed Germany to become the world’s third-biggest economy. Its gross domestic product still trailed Japan’s and was only one-third the size of the U.S. economy. Today, China’s GDP is three times larger than Japan’s and steadily closing on the No. 1 spot. If Chinese President Xi Jinping is able to deliver on growth-boosting reforms, and U.S. President Joe Biden’s legislative agenda stumbles, China could overtake the U.S. as soon as 2031, according to forecasts by Bloomberg Economics.

Western nations have also done their part to boost China’s confidence. Three weeks after the 2008 closing ceremony in Beijing, Lehman Brothers filed for bankruptcy, setting off a global financial crisis that pummeled economies around the world, China’s included. An estimated 20 million migrant Chinese workers lost their jobs, prompting the government to introduce a 4 trillion-yuan ($630 billion) stimulus package in November 2008. That, along with a surge in lending by the country’s state-owned banks, made China, and not the U.S., the world’s primary engine for growth for the past 15 years. Although the global economy would recover, China’s view of the West never did. The financial crisis “dashed” any illusions that the Western system was “near-perfect”.

For many countries, hosting the Olympics no longer seems worth the cost or the headaches—and that was before the global pandemic rewrote the rules for sprawling gatherings. But enthusiasm for big, expensive international contests hasn’t dimmed for countries such as Russia, Qatar, and China.  To get to host the 2008 Olympics, the Chinese capital beat out Istanbul, Osaka, Paris, and Toronto. And the Communist Party worked overtime to demonstrate that China took its global responsibilities seriously. For the 2022 edition, China’s only competition was Almaty, Kazakhstan’s largest city, which has recently been engulfed in violent anti-government protests.

In the runup to the 2008 games, the International Olympic Committee argued that having China host would push the country toward convergence with the West on issues such as human rights. Instead, today the divergence is as vast as ever.

3 key takeaways from the article

1. For China, hosting the 2008 Summer Olympics was a chance to prove it could hold its own among the great global powers. When the world tunes in for the opening ceremonies of the 2022 Winter Olympics on Feb. 4, a very different China will be in the spotlight.
2. In 2008 the country had just surpassed Germany to become the world’s third-biggest economy. Today, China’s GDP is three times larger than Japan’s and steadily closing on the No. 1 spot.
3. In the runup to the 2008 games, the International Olympic Committee argued that having China host would push the country toward convergence with the West on issues such as human rights. Instead, today the divergence is as vast as ever.

Full Article

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Topics: China, Internation Politics, Economy

Leading & Managing Section

Persuade Your Company to Change Before It’s Too Late

By Pontus M.A. Siren, et al., | Harvard Business Review | From the Magazine (January–February 2022)

There’s a paradox facing leaders seeking to transform their organizations as they see their markets begin to change. On one hand, they need convincing data to make the case that transformation is necessary—to show that their companies are about to find themselves on “burning platforms.” On the other hand, by the time public data about disruptive trends and market shifts is convincing, the window of opportunity has shrunk, if not disappeared. And when companies actually are on burning platforms, their leaders confront a harsh reality: Burning platforms inhibit change by increasing rigidity at the very moment when flexibility is crucial. The lesson: Avoid ever ending up on a burning platform. But that requires leaders to act before compelling data is widely available.

So how can leaders get their companies to act before their businesses are on bona fide burning platforms? By generating private data and lowering the threshold of proof.  Public data, the kind found in industry reports, rarely produces the will to act early. But private data can be a game-changer.  

There are three broad categories of private data. The first is qualitative data. This includes testimonials from customers who provide insight about their future actions and behind-the-scenes stories of purchasing decisions that were “near misses”—meaning customers almost made a different choice. The second category is quantitative data, such as analyses of purchasing behavior in specific customer segments or analyses that track shifting market sentiment by identifying patterns in comments on chat boards or employee review sites like Glassdoor.  The final category is proprietary models that process and analyze data in unique ways.

There are two ways to lower the threshold of proof enough to motivate an organization to take early action. The first is to use frameworks and models to make sense of incomplete information. The information-action paradox framework served this purpose.  Another framework that can help firms to interpret faint signals is Christensen’s disruptive innovation model, which shows that disruptive change often starts in less-demanding market segments or among customers that have historically lacked the skills or wealth to consume existing solutions.  A second way to lower the threshold involves techniques that help groups align around a course of action in the face of uncertainty. 

3 key takeaways from the article

1. There’s a paradox facing leaders seeking to transform their organizations as they see their markets begin to change. On one hand, they need convincing data to make the case that transformation is necessary.  On the other hand, by the time public data about disruptive trends and market shifts is convincing, the window of opportunity has shrunk, if not disappeared.
2. How can leaders manage this paradox?  By generating private data and lowering the threshold of proof.
3. Three broad categories of private data are:  qualitative data from the customers, quantitative data, such as analyses that track shifting market sentiment by identifying patterns in comments on chat boards or employee review sites like Glassdoor, and the proprietary models that process and analyze data in unique ways.  Two ways to lower the threshold of proof enough to motivate an organization to take early action are: use frameworks and models to make sense of incomplete information and use techniques that can help groups align around a course of action in the face of uncertainty.

Full Article

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Topics:  Strategy, Innovation, Market Research

Why Companies Practice Corporate Social Responsibility

By Shawn Pope and Alwyn Lim | MIT Sloan Management Review | January 20, 2022

For two decades now, the question of why companies practice corporate social responsibility (CSR) has gripped practitioners, policy makers, and academics alike. Strong interest in this question has been driven by the increasing engagement of companies worldwide in all manner of CSR activities, from reducing carbon emissions to increasing the gender and racial diversity of boards of directors.

The breadth of almost 200 surveys that have queried business leaders in over 70 countries on their CSR motivations offers evidence of the high level of interest in this topic. Research has been conducted by nearly every blue-chip consultancy, including McKinsey, EY, BCG, PwC, KPMG, Deloitte, and Accenture, as well as by major political bodies, such as the United Nations, the European Commission, and the U.S. Chamber of Commerce.  What can be learned about companies’ CSR motivations from these high-profile surveys?  Three features of companies CSR behavior emerge from meta analysis of these 200 surveys.

1. The Saint.  Figuratively speaking, businesses have joined the church and now sing in the choir with activists and governments about the goodness of CSR. The motivations that businesses are most likely to select in these surveys are those that portray CSR as a matter of the company’s own values, ethics, morality, or culture — normative motivations.
2. The Halo.  CSR is not pure altruism, however. Companies generally do expect rewards from their good deeds. These rewards, importantly, may even depend on noble motivations. Consumers, for example, crave authenticity and want to buy products from companies whose hearts are in the right place.
3. The Warm Glow.  The halo of CSR bathes the entire enterprise in a favorable light and anoints it as having good character. According to experimental research, when companies are considered virtuous, they are also thought to be competent — even though these qualities are distinct. Similarly, companies that practice CSR are punished less by consumers for scandals, because consumers impute good intentions to these companies, despite any unfortunate events that may have transpired.  This perception that a company has good character can deliver many benefits.

3 key takeaways from the article

1. For two decades now, the question of why companies practice corporate social responsibility (CSR) has gripped practitioners, policy makers, and academics alike.
2. The breadth of almost 200 surveys that have queried business leaders in over 70 countries on their CSR motivations offers evidence of the high level of interest in this topic.
3. What can be learned about companies’ CSR motivations from these high-profile surveys? Emerging from the recent meta-analysis is a picture of CSR as a halo strategy: By presenting themselves as true believers in CSR (saints), businesses seek to improve the overall corporate image (the halo) and expect broad benefits from diverse stakeholders to follow (the warm glow).

Full Article

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Topics:  Corporate Social Responsibility, Stakeholders

The powerful role financial incentives can play in a transformation

By Hugh Bachmann et al., | McKinsey & Company | January 19, 2022

Based on McKinsey’s experience of supporting hundreds of trans­formation efforts, generous and specific financial incentives are one of the most effective tools available for executives to motivate employees. In fact, companies that implemented financial incentives tied directly to transformation outcomes achieved almost a fivefold increase in total shareholder returns (TSR) compared with compa­nies without similar programs.  The research offers seven principles companies can use to help ensure their transformation-incentives programs achieve the desired outcomes and behavior.  Three of these are being shared in this extractive summary.

1. Tie incentives directly to transformation outcomes within the control of participants.  Too often, transformation-incentives programs are tied purely to general outcomes (for example, overall company earnings). For many employees, this metric is beyond their control, so tying incentives to this distant outcome can weaken their effective­ness. In some ways, a transformation can be compared to a pointillist painting.  Zoomed in, each dot in the painting represents a single initiative owned by a single employee. Given the ability of performance-tracking tools to monitor progress on these initiatives, companies can get a clear picture of the new value being created by individual employees and teams. This visibility enables companies to calculate targeted financial incentives that directly influence the actions taken by specific employees.
2. Encourage outperformance rather than just good performance.  Transformational impact requires transformational incentives. Therefore, payouts must be generous and focused on encouraging transformational performance rather than just good performance.
3. Use the incentives program to encourage broader participation.  Sustained transformational change requires the widespread involvement of employees across an organization. Recent McKinsey research found TSR increases as the share of employee involvement expands. This objective can be accomplished by mobilizing every employee to participate in the program—either by contributing to or owning an initiative.

The other four are:

4. Include performance metrics beyond the financial impact
5. Ensure payouts are made soon after initiatives are completed
6. Tailor the program to the organization’s strategy and culture
7. Keep the design simple yet precise

3 key takeaways from the article

1. Based on McKinsey’s experience of supporting hundreds of trans­formation efforts, generous and specific financial incentives are one of the most effective tools available for executives to motivate employees.
2. The research offers seven principles companies can use to help ensure their transformation-incentives programs achieve the desired outcomes and behavior.
3. Tie incentives directly to transformation outcomes within the control of participants, encourage outperformance rather than just good performance, use the incentives program to encourage broader participation, include performance metrics beyond financial impact, ensure payouts are made soon after initiatives are completed, tailor the program to the organization’s strategy and culture, and keep the design simple yet precise.

Full Article

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Topics:  Transformation, Performance Measurement, Financial Incentives

Eight Persuasion Tactics Anyone Can Use To Be More Convincing

By Expert Panel of Forbes Council Members | Forbes Magazine | January 21, 2022

Every professional should master the art of persuasion. Whether you’re negotiating for a raise, pitching to an investor, giving a presentation, or trying to win a new client, having influence can help reach your goal.  

Eight members of Young Entrepreneur Council share top tips to appeal to others — and why those tactics work so well.  These are:

1. Talk Less, Listen More, Solve Their Problems.  Let the other party talk about themselves, their situation, and what they’re looking for. Once they’re finished telling you all that they want to tell you, speak to them in a way that demonstrates you understand their challenges and desires. Explain how you intend to solve their most pressing problems or fulfill their wishes.
2. Lead With Your Investment Thesis.  Successful pitches find the balance between emphasizing the idea while maintaining a structure relatable to investors. Get the point across quickly and clearly with inductive reasoning. This means open with the conclusion and then explain the details that help an investor believe it’s valid. 
3. Ask The Right Questions To Understand Needs.  If you create a great series of questions, your potential customer will not only appreciate the well-thought-out questions but will share with you exactly what it will take to convince them.
4. Create A Win-Win Scenario With Data Or Facts.  Creating a scenario in a presentation where there is no loser and little to no risk is a great tactic. The secret to this is for it to be legitimate and verifiable. That means data, facts, and an easy opt-in for those you are persuading.
5. Use The Art Of Storytelling From Experience.  The art of storytelling, especially when it comes from personal experience. Starting off by sharing an experience not only gives your approach a personal touch, but shows the audience your character in how you frame the story, problem and proposed solution. Plus, storytelling supplements data and statistics so your presentation isn’t dry.
6. Make Them Feel You’re On The Same Team.  You can approach this with the sense that you’re both trying to solve the same problem or from the point of view that you’re both a part of a group of people with a shared belief. This will help you to avoid the other party feeling like they’re being sold to, which can make them defensive. 
7. Use Proper Body Language And Eye Contact.  Make enough eye contact to show that you’re paying attention, but make sure not to stare as you might come off rude or intimidating. It’s also important to face the other party with open arms — literally — to show that you’re invested in the conversation and what they have to say.
8. Share Credentials That Reinforce Authority.  People trust and listen to a person or organization that is clearly a recognized authority on a subject. If you want to persuade a client or an investor to work with you, then share credentials that reinforce your authority from the very beginning. 

Two key takeaways from the article

1. Every professional should master the art of persuasion. Whether you’re negotiating for a raise, pitching to an investor, giving a presentation, or trying to win a new client, having influence can help reach your goal.  
2. Eight members of the Young Entrepreneur Council share top tips to appeal to others — and why those tactics work so well.  These are: talk less, listen more, solve their problems, lead with your investment thesis, ask the right questions to understand needs, create a win-win scenario with data or facts, use the art of storytelling from experience, make them feel you’re on the same team, use proper body language and eye contact, and share credentials that reinforce authority.

Full Article

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Topics:  Persuasion, Personal Development, Leadership, Selling

Entrepreneurship Section

New Study Reveals the Top 3 Small-Business Cyber Threats You’ve Probably Never Heard Of

By Melissa Angell | Inc Magazine | January 21, 2022

If you think your business is completely protected from inbound cyberthreats, think again.  A study released Wednesday from the San Diego-based CyberCatch, a cybersecurity platform provider focusing on small and mid-size businesses, reveals that more than 30 percent of U.S. small businesses have weak points that bad actors can exploit. Moreover, fraudsters tend to set their sights on small businesses since smaller companies usually have weaker security safeguards in place compared with those at larger companies.

Some of the main vulnerabilities that small businesses face include “spoofing,” “clickjacking,” and “sniffing,” according to the study.   Spoofing occurs when a bad actor uses a fake IP address to masquerade as an authorized device with the goal of tapping into a company’s private system. A clickjacking attack is a technique used to persuade a user to click on something that looks benign in their browser when they’re actually clicking on something malicious. And as it turns out, sniffing attacks have nothing to do with smell, but rather involve hackers intercepting a network’s traffic to access unencrypted data.

So what to do?  A small business must first understand what are its crown jewels (its most valuable data and IT assets) and then make sure prevention, detection and response cybersecurity controls are implemented.  Once you’ve assessed your valuable real estate, test all of their systems–which include websites, software and web applications–to locate any security vulnerabilities. Vulnerabilities can range from a disabled security feature in your system to injections of malicious code commonly seen in cross-site scripting (XSS) attacks.  If you spot any security holes, patch them up before a cyberattacker finds them. Inspect your websites or web servers regularly to detect any other weaknesses in their software. With these safe guards in place, businesses will be better positioned to fend off the attacks coming their way. 

3 key takeaways from the article

1. A study released Wednesday from the San Diego-based CyberCatch, a cybersecurity platform provider focusing on small and mid-size businesses, reveals that more than 30 percent of U.S. small businesses have weak points that bad actors can exploit. 
2. Some of the main vulnerabilities that small businesses face include “spoofing,” “clickjacking,” and “sniffing,”
3. Small businesses need to understand what are its crown jewels (its most valuable data and IT assets) and then make sure prevention, detection and response cybersecurity controls are implemented.  Once you’ve assessed your valuable real estate, test all of their systems–which include websites, software and web applications–to locate any security vulnerabilities.

Full Article

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Topics:  Cybersecurity, Small Business, Hacking

3 Bad Leadership Habits to Leave Behind This Year

By Rob Volpe | Entrepreneur Magazine | January 23, 2022

Though 2022 has started off repeating some of the same headlines as early 2021 – it doesn’t mean that we should repeat the leadership mistakes we made in 2021 (or even 2020).  Three bad habits to leave behind in 2021 and the new behaviors to replace them are:

Bad Habit No. 1: Cameras Off.  Still many people jump onto video calls with their cameras off. Excuses abound, from no excuse to messy backgrounds or to more legitimate technical issues. Yet people then complain that they can’t make the same connection with their colleagues as they can in person. Of course you can’t. Turn your camera on and make it a requirement of all participants to do the same.

Bad Habit No. 2: All Business All the Time.  What we’ve really lost in our work from home reality are those spontaneous moments of connection e.g., passing by coworkers in the hallway and chatting in the kitchen or at the water cooler have all gone away, and Slack, Teams and Zoom haven’t figured out how to replicate it digitally — at least not yet.  What’s been lost is the ability to check in and observe how your team is really doing. So make an investment of time and effort into your team. Rewrite the script on the traditional update meeting by focusing the first 10­­-15 minutes on personal talk. Ask broad, exploratory questions such as, “How are you?” and don’t let “fine” be the answer. “Tell me more about that…” is a great follow-up. And most importantly, open up and share about yourself.

Bad Habit No. 3: Talking About Putting the Genie Back in the Bottle.  Were you one of the leaders who got slapped on the wrist when you talked wistfully about a “return to work”? You know it meant the resumption of work out of an office space. However, many people took offense at what they perceived as a slight, particularly when they had worked hard to make working from home work for them and their employer. Studies are finding that productivity didn’t take the big hit that industry leaders feared. The past is the past, and it’s behind us and our route to the past is irreversibly blocked.  So embrace the change and co-create a solution with your employees. Take the time to learn what they want. Help them understand your own concerns.

2 key takeaways from the article

1. Though 2022 has started off repeating some of the same headlines as early 2021 – it doesn’t mean that we should repeat the leadership mistakes we made in 2021 (or even 2020).  
2. Three bad habits to leave behind in 2021 and the new behaviors to replace them are:  Bad Habit No. 1: Cameras Off – turn these on and make it a requirement of all participants to do the same.  Bad Habit No. 2: All Business All the Time.  Bad Habit No. 2: All Business All the Time. Rewrite the script on the traditional update meeting by focusing the first 10­­-15 minutes on personal talk.  Bad Habit No. 3: Talking About Putting the Genie Back in the Bottle. Embrace the change that work from home will remain there so co-create solutions with your employees.

Full Article

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Topics:  Productivity, Leadership