Extractive summaries of and key takeaways from the articles curated from TOP TEN BUSINESS MAGAZINES to promote informed business decision making | Week 235|March 11-17, 2022
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Shaping Section : Ideas and forces shaping economies and industries
War and sanctions have caused commodities chaos
The Economist | March 12, 2022
Today Russia’s invasion of Ukraine is unleashing the biggest commodity shock since 1973, and one of the worst disruptions to wheat supplies since the first world war. Although commodity exchanges are already in chaos, ordinary folk have yet to feel the full effects of rising petrol bills, empty stomachs and political instability. But make no mistake, those things are coming—and dramatically so if sanctions on Russia tighten further, and if Vladimir Putin retaliates. Western governments need to respond to the commodity threat as determinedly as to Mr Putin’s aggression.
The turmoil unfolding in energy, metals and food markets is broad and savage. Such are the consequences of Mr Putin’s decision to drive his tanks across the breadbasket of Europe, and the subsequent isolation of Russia, one of the world’s biggest commodities exporters. Western sanctions on Russian banks have made lenders, insurers and shipping firms wary of striking deals to carry Russian cargoes, leaving growing piles of unsold industrial metals and an armada of vessels full of unwanted Urals crude. Stigma and danger have caused others to stay away.
It could get worse. On March 8th, in the latest measure to increase pressure on Mr Putin, America announced that it would ban purchases of Russian oil. If the European Union were to join the embargo, about two-thirds of the 7m-8m barrels a day of exports of Russian crude and refined products would be affected, equivalent to about 5% of global supply. A full global embargo, enforced by America, could send the oil price towards $200 a barrel.
The effects of this commodity calamity could be brutal. Global inflation, already at 7%, may rise by another two to three percentage points, to a level last seen for a sustained period in the early 1990s. Growth may slow as firms’ confidence is knocked and interest rates rise. In the political realm, it will not be the leaders in poor countries of the world who could backpack in the form of violent protests. Such a panorama of suffering and instability is worrying in its own right. But it also threatens to undermine the credibility of the Western response to Russia’s decision to start what may become the largest war in Europe since 1945.
3 key takeaways from the article
- Today Russia’s invasion of Ukraine is unleashing the biggest commodity shock since 1973, and one of the worst disruptions to wheat supplies since the first world war.
- The turmoil unfolding in energy, metals and food markets is broad and savage. And It could get worse.
- The effects of this commodity calamity could be brutal. Global inflation, already at 7%, may rise by another two to three percentage points. Growth may slow as firms’ confidence is knocked and interest rates rise. In the political realm, it will not be the leaders in poor countries of the world who could backpack in the form of violent protests. It also threatens to undermine the credibility of the Western response to Russia’s decision to start what may become the largest war in Europe since 1945.
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Topics: Commodities, War, Inflation
Global Economics Intelligence executive summary, February 2022
McKinsey & Company | March 8, 2022
Much of the recent data show a growing global economy, but at a restrained pace due to rising inflation, supply chain bottlenecks, and effects of more recent pandemic restrictions. The Organisation of Economic Co-operation and Development (OECD) measured a drop in consumer confidence as inflation accelerated. Retail sales have been subdued globally, except in the United States, where spending is strongest, with purchases slowly shifting from goods to services. Notable, however, is that during the crisis, eurozone households retained significant currency and deposits, estimated at one thousand billion euros, representing a record level of disposable income.
Industry indicators, including the global purchasing managers’ indexes (PMIs) for services and manufacturing, reveal that growth slowed at the start of the new year, a result of the recent wave of COVID-19, driven by the Omicron variant.
Overall yearly growth in world trade volumes in 2021 was 10.3%, bringing trade volumes significantly higher than prepandemic levels. Unemployment rates have trended lower in most surveyed economies in recent months, except in India.
Consumer inflation continues to accelerate in the surveyed economies, reaching 7.5% in the United States, 5.1% in the eurozone, 6.0% in India, and 10.4% in Brazil. China, where consumer inflation is 0.9%, is the exception.
Commodity prices were rising even before the attack on Ukraine, at which point prices spiked. The invasion of Ukraine has mostly set energy prices surging; they were already rising as a result of slower OPEC output.
In the financial markets, most equity markets experienced losses or slower growth as well as higher volatility in January and February, a result of geopolitical tensions and uncertainty around central-bank interest rates. Prior to the invasion of Ukraine, the US dollar was depreciating slightly against most major currencies; it is now rising in value. The cost of capital, as reflected in rising yields for ten-year government bonds, has been trending upward. The central banks of most surveyed economies have been hesitant to lift policy interest rates; Brazil and Russia are exceptions.
The immediate economic effects of the Russian government’s invasion of Ukraine, launched on February 24, were spikes in the prices of gold, crude oil, and natural gas, as well as stock-market losses. Investors globally sought safe haven in bonds, the dollar, the Japanese yen, and gold. Economists and analysts are now attempting to calibrate longer-term effects, including on inflation and growth estimates.
3 key takeaways from the article
- Much of the recent data show a growing global economy, but at a restrained pace due to rising inflation, supply chain bottlenecks, and effects of more recent pandemic restrictions.
- In the financial markets, most equity markets experienced losses or slower growth as well as higher volatility in January and February, a result of geopolitical tensions and uncertainty around central-bank interest rates.
- The immediate economic effects of the Russian government’s invasion of Ukraine were spikes in the prices of gold, crude oil, and natural gas, as well as stock-market losses. Investors globally sought safe haven in bonds, the dollar, the Japanese yen, and gold. Economists and analysts are now attempting to calibrate longer-term effects, including on inflation and growth estimates.
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Topics: Global Economy, Commodity Markets, Energy Markets
China’s tech hub Shenzhen locks down 17.5 million residents, closing Apple factories and risking chaos in the global supply chain
By Eamon Barrett | Fortune Magazine | March 14, 2022
Apple supplier Foxconn shut operations at two of its largest manufacturing sites in Shenzhen on Monday, after authorities in China’s southern tech hub ordered the city of 17.5 million into lockdown to combat an outbreak of COVID-19. The lockdown is scheduled to last a week, during which time health authorities say they will test every resident three times.
According to Foxconn it has “adjusted its production line to minimize the potential impact” of the lockdown in Shenzhen, tapping into the company’s “diversified production sites in China.” Besides rerouting Apple’s supply chain, the weeklong lockdown in Shenzhen could cause major disruption to the international supply lines of other tech giants. Shenzhen is home to some of the world’s largest ports and is a major terminus in trade between the U.S. and China.
When authorities halted operations at Shenzhen’s Yantian port to tackle a COVID outbreak last June, it caused a shipping backlog that took months to ease. Yantian is the world’s fourth-largest port and processes roughly 90% of China’s electronics shipments. One executive at shipping giant Maersk described last year’s four-week port closure as “a much bigger disruption than the Ever Given getting stuck in the Suez Canal.”
Shenzhen is the largest Chinese city to implement a full-scale lockdown since Wuhan and its neighbors did so during the first COVID outbreak in early 2020, sealing roughly 40 million people indoors. Since then, other major cities—like Shanghai, which is currently combating its own COVID outbreak—have implemented localized lockdowns to contain COVID by cordoning off individual neighborhoods and residential compounds.
But Shenzhen, home to tech giants including Tencent and Huawei Technologies, is potentially at greater risk of a massive COVID outbreak than other Chinese cities. The southern tech hub shares a border with Hong Kong, which is currently suffering its worst COVID outbreak since the pandemic began, logging over 30,000 cases per day.
3 key takeaways from the article
- Apple’s supplier Foxconn shut operations at two of its largest manufacturing sites in Shenzhen on Monday, after authorities in China’s southern tech hub ordered the city of 17.5 million into lockdown to combat an outbreak of COVID-19.
- When authorities halted operations at Shenzhen’s Yantian port to tackle a COVID outbreak last June, it caused a shipping backlog that took months to ease. Yantian is the world’s fourth-largest port and processes roughly 90% of China’s electronics shipments.
- The weeklong lockdown in Shenzhen could cause major disruption to the international supply lines of other tech giants.
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Topics: Global Supply Chain, China, Apple
Leading & Managing Section
Managers Can’t Do It All
By Diane Gherson and Lynda Gratton | Harvard Business Review | From the Magazine (March–April 2022)
Managers everywhere are asking the questions including what happened to the stable, well-defined job that he/she was so good at for so long? What happened to the power and status that used to come with such jobs? Is the individual problem? Is she/he simply no longer able to keep up with the demands of the evolving workplace? Is she/he now part of the “frozen middle”—the much-maligned layer of management that obstructs change rather than enables it?
According to the authors, as professionals, they have closely observed the changing job of the manager, and according to these authors, a crisis is looming. The signs are everywhere. In 2021, when they asked executives from 60 companies around the world how their managers were doing, they got unanimous reports of frustration and exhaustion.
The problem isn’t hard to diagnose. The traditional role of the manager evolved in the hierarchical workplaces of the industrial age, but in our fluid, flatter, postindustrial age that role is beginning to look archaic. The irony is that we actually need great people leaders more than ever.
Waves of innovation have changed the role of the manager along three dimensions: power, skills, and structure. In a power shift, managers have to think about making teams successful, not being served by them. In a skills shift, they’re expected to coach performance, not oversee tasks; and in a structural shift, they have to lead in more-fluid environments. Organizations are starting to recognize this. Some organizations have taken deliberate steps to reimagine the role of the manager around three important areas coaching, communication, and employee well-being. Their new Models of Management include building new skills at scale, rewiring processes and systems, and splitting the role of the manager.
3 key takeaways from the article
- Managers everywhere are asking questions such as what happened to the stable, well-defined job that he/she was so good at for so long? The partial answer is changing job of the manager – a crisis is looming. And the signs are everywhere.
- The problem isn’t hard to diagnose. The traditional role of the manager evolved in the hierarchical workplaces of the industrial age, but in our fluid, flatter, postindustrial age that role is beginning to look archaic.
- Waves of innovation have changed the role of the manager along three dimensions: power, skills, and structure. Hence a New Models of Management include building new skills at scale, rewiring processes and systems, and splitting the role of the manager.
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Topics: Middle Management, Organizational Development, Business Performance
The Quest for a Killer KPI
By Omri Morgenshtern et al., | MIT Sloan Management Review | March 08, 2022
Performance metrics are among managers’ most powerful tools: Setting the right goals and tracking progress accurately can help you take your business where you want it to go. To be effective, though, goals and metrics need to be clear and simple, and the fewer the better. This article is based on the experience of how Agoda, the Asia-based subsidiary of the Booking Holdings online travel group, made its way to a single “KPI + constraint” approach that helps them run a good bit of their business.
According to the authors in their growing company, they have learned that simplicity increases their odds of achieving what they want. When their goals were too numerous and too complex, employees’ decisions didn’t sync up within or across teams, which meant groups and individuals were tugging in various directions and failing to produce desired outcomes at scale. So they set out to identify a single key performance indicator that would unify behavior within one major customer-facing group and could also serve as a shared currency across teams, enabling them to make smarter investments in the business. But they realized that going all in on a KPI without putting some sort of check on it could have serious unintended consequences. They knew that any primary goal had to be bounded by a constraint, as in, “Maximize X without reducing Y.” Based on their experience, they suggested nine takeaways for other business.
- At the very beginning of each project, define a primary metric or set of metrics that will gauge success. Having too many measures creates chaos and confusion.
- Assign a KPI to every project. Even projects that aren’t usually thought of as data-based should be measured.
- Look for a KPI that is relevant across teams. That will create a shared language and will help you prioritize your investments in the business.
- Try to break that KPI repeatedly. Continue to ask yourself, “How would it be possible to achieve this KPI but fail to meet business goals?”
- Revise the KPI again and again. Improve it just as you improve your products.
- Define a primary constraint that needs to be met while you strive for the KPI. What can you not sacrifice in pursuit of that goal? Review this constraint often to make sure it remains relevant.
- Keep your data clean and reliable. Use proper statistical methods and up-to-date technology.
- Accelerate innovation and experimentation, but limit error. More velocity and more volume will lead to faster learning, but too much can generate unacceptable mistakes.
- Let the process of measurement inspire your culture. As employees see the benefits of measurement — such as a clear view of what’s working, and insights about the relationship between individual actions and company success — the culture becomes more unified, more cooperative, and more oriented toward learning.
2 key takeaways from the article
- Performance metrics are among managers’ most powerful tools: Setting the right goals and tracking progress accurately can help you take your business where you want it to go. To be effective, though, goals and metrics need to be clear and simple, and the fewer the better.
- Based on the experience of how Agoda, the Asia-based subsidiary of the Booking Holdings online travel group, made its way to a single “KPI + constraint” approach that helps us run a good bit of our business, 9 takeaways are shared in this article.
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Topics: Performance Management, Organizational Behavior
Understanding Customers’ Experiences
5 Secrets of a Profoundly Remarkable Customer Experience
By Chip Bell | Forbes Magazine | Mar 15, 2022
Customer loyalty comes in many forms. The pinnacle of customer loyalty is advocacy—remarking favorably to another person face-to-face, ear-to-ear, or click-to-click. So, what insights would you gain if you asked your customers, “When you felt so good about a service experience that you told a story about to others, what exactly was going on?” The author and his colleagues have been asking clients and workshop audiences the incidents that became an integral and permanent part of a customer’s collection of life stories. The hundreds of stories shared with them by customers were organized around five consistent themes.
Enchant: Turning Value-added into Value-Unique. Customers reported some experiences that seemed enchanting and magical. These reported experiences all contained an element of surprise. They were more than the typical exceed-your-expectations, value-added experiences; they were value-unique. When customers witness unpretentious inventiveness, it signaled an authenticity they could trust. Symbolically, it is the difference between store-bought and homemade.
Enlist: Customers Care When They Share. Sentiments of meaningful inclusion characterized some customers’ profoundly remarkable stories. The gesture of collaboration made them feel like an insider with special privileges. It signaled a recognition and respect for the fact that all service experiences are co-created, not “factory-made.”
Enlighten: Creating a Customer Mentor Relationship. Customers today enjoy a sense of accomplishment that comes with the capacity to demonstrate confident competence in aspects of their lives. Learning and the quest for mastery today are potent motivators of customer loyalty. Creatively providing opportunities for reciprocal learning—much like “learning together” mentoring—nurture a long-term partnership.
Ease: Pursuing an Unconstrained Customer Solutions. Flow is a word we don’t hear much about in the service world. But service is truly a performing art that requires flow. Instead of flow, we talk about effortlessness, simplicity, and easy-to-do-business-with. Unfortunately, none of these words capture what customers desire. Most customers seek to eliminate all arbitrary, illogical, and stupid constraints that prevent service providers and customers from “flowing” to a solution, not just a task. They care as much about eliminating angst and worry as they do about quashing bureaucracy and wait.
Engrave: The Soul of Profoundly Remarkable Service. The brand names of the popular service providers frequently cited as deliverers of profoundly remarkable service, most had a well-known brand promise and mission. “They know who they are, “and it is reflected in how they do what they do.” The takeaway is most customers today value substance over superficial, character over cosmetic.
3 key takeaways from the article
- Customer loyalty comes in many forms. The pinnacle of customer loyalty is advocacy.
- The insights you will get if you ask your customers, “When you felt so good about a service experience that you told a story about to others, what exactly was going on?”
- Five consistent themes emerge when asked from the customers about incidents that became an integral and permanent part of their collection of life stories about their experiences of a brand. These themes are: Enchant: Turning Value-added into Value-Unique, Enlist: Customers Care When They Share, Enlighten: Creating a Customer Mentor Relationship, Ease: Pursuing an Unconstrained Customer Solutions, and Engrave: The Soul of Profoundly Remarkable Service.
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Topics: Marketing, Customers’ Experiences, Customers’ Loyalty
Entrepreneurship
Covid Two Years Later: 6 Hard-Won Lessons From Businesses That Survived the Pandemic
By Steven I. Weiss | Inc Magazine | March 11, 2022
It’s been two years since the World Health Organization declared Covid a global pandemic, and since then nearly every facet of business has been upended. While hundreds of thousands of businesses did not make it, those that have survived have done so out of sheer determination, the goodwill of consumers, and ingenuity. They’ve also challenged their own revenue models, set fire to their business plans, and learned more in the span of two years than some people have in an entire lifetime. The businesses which moved forward in a very new direction–and found success – several shared themes in what made their pivots successful emerge are:
- Take the time for self-care. Every business owner needed to take some breaks for mental health, dealing with Covid, and more. Some had special events requiring a break: A consistent theme for all founders pulling off pivots was the notion of “put on your oxygen mask first.” If you’re not in a position to take care of yourself, you won’t be in a position to take care of your family, your company, and your team.
- Don’t hope for the past. Founders who successfully pulled off a pivot came to an assessment sooner rather than later that they were not going back to their old way of working.
- Assess the cuts you need to make. Founders spend an immense amount of time recruiting and building a company culture, and then cultivating relationships with team members. It can be hard to let that go, but a company that can’t afford to keep anyone, because it kept too many people for too long, isn’t doing team members any favors.
- Find additional talents among your talent pool. If you’re going to pivot with the people you have, they often have to pivot, as well. Who your team members are and what unique skills they bring can help guide you in your new direction.
- Listen to your customers. All of the companies that successfully pivoted had some kind of existing customer base. Interacting with those customers to find out what was needed amid a world-changing event was a key guide. It’s always a good idea to listen to your customers describe their needs and wants and to consider moving in new directions as a result. In a time of massive upheaval, it’s not just a good idea–it can be what keeps your business alive.
2 key takeaways from the article
- It’s been two years since the World Health Organization declared Covid a global pandemic, and since then nearly every facet of business has been upended.
- The businesses which moved forward in a very new direction–and found success – several shared themes in what made their pivots successful emerge are: take the time for self-care, assess the cuts you need to make, don’t hope for the past, find additional talents among your talent pool and listen to your customers.
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Topics: CVID-19, Business Recovery, Business Model
5 Bad Business Habits You Need to Stop Immediately
By Dylan Ogline | Entrepreneur Magazine | March 10, 2022
The author of the article discovered five business-killing mistakes by making them. He eliminated them one by one through painstaking effort. Some of them were hard to break. It felt like letting go of a part of his soul. But with each habit he shed, his prospects got brighter. According to him, you don’t have to change overnight. If you see yourself in more than one of these habits, pick one of them to break and then move on to the next one.
- Stop setting price traps for yourself. Much of your early business will come from referrals, and the new guy will always ask the last guy how much you charged him. And they won’t pay $3,000 if the last guy paid $500. Charging a high price takes confidence, a belief in the value of your solution vs. a competitor’s solution. Aspiring entrepreneurs who lack that confidence often assuage their insecurity by charging a lower price – it’s a trap.
- Stop creating websites and business cards before you make a sale. “So you’re going into business. Have you made a sale?” “Well, I need to make a website and business cards first. Get a phone system setup. YouTube Channel, Instagram, and the works. Oh and a really nice logo!” Nope. Nope, nope, nope. According to the author that doesn’t fly with him. His response is “Stop designing your business card and make a sale. You don’t even know if you have a market fit yet. If you don’t have fit, that business card is just a waste of time, money and trees.” The sooner you face that fire, the better. A business is not defined by a website or a business card. A business is defined by its sales.
- Stop building the product or service before you make a sale. To avoid going out and trying to make a sale, many will say “Well, the product isn’t ready yet. I want to get it just right.” The author’s answer: “Why are you building a product you haven’t sold yet? If no one has bought it, how do you know if anyone will even want it?” Sell a product before you build it? Many people can’t wrap their heads around that. It sounds dishonest. But it’s not. Companies pre-sell products all the time. iPhones, video games, VR glasses, Tesla’s Model 3 — people line up for these products based on concept drawings alone.
- Stop building your business on the cheap. Aspiring entrepreneurs often come from a position of scarcity. They pinch pennies. It’s like they don’t have the confidence that they will ever make a sale, and it becomes a self-fulfilling prophecy. If your brand is clearly put together on the cheap — cheap products, slipshod marketing, etc. — why should anyone buy from you, even if you offer the lowest price? It’s a race to the bottom, and you want no part of it.
- Stop building the business around you. This is one of the hardest habits to break, especially for solopreneurs. Early in your business, you will wear many hats and perform many tasks yourself. It’s easy to slip into the mindset that nobody can wear those hats as you do. Don’t make this mistake. Design every aspect of your business with the expectation that eventually, someone else will take over that role.
2 key takeaways from the article
- There are bad business habits that we acquire or develop with the assumption that they can help our business to grow. This may not be the case. Rather in most of the cases, these habits become counterproductive.
- 5 bad business habits you need to stop immediately are: stop setting low price traps for yourself; stop creating websites and business cards before you make a sale; stop building the product or service before you make a sale; stop building your business on the cheap, and stop building the business around you.
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Topics: Entrepreneurship, Growth, Business Model
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