Extractive summaries of and key takeaways from the articles curated from TOP TEN BUSINESS MAGAZINES to promote informed business decision making | Week 241|April 22-28, 2022
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Shaping Section : Ideas and forces shaping economies and industries
All over the rich world, new businesses are springing to life
The Economist | April 23, 2022
The lasting effects of the covid-19 pandemic on the economy are starting to become clear. Surveys suggest that Americans who can work from home are likely to do so for two or three days a week in the post-covid world, compared with hardly at all in 2019. Companies have regained their appetite for capital spending. And the pandemic appears to be provoking a shift towards higher levels of entrepreneurship around the rich world.
Economists are mainly focusing on the surge of new firms in America. But the trends are wider. Using data for a range of rich countries the Economist estimates that in the fourth quarter of 2021 the number of “enterprise entries”—ie, newly formed companies—was 15% higher than the average before the pandemic. An extra 1m or so firms have sprung to life across the OECD group of mostly rich countries since the first lockdowns, compared with the pace of business creation before 2020. Not everywhere is booming. But most places are more vibrant.
Some of these new firms are in glamorous industries. With global venture capital booming, startups from Triple Whale (e-commerce) in Columbus, Ohio, to Payrails (fintech) in Berlin are receiving lots of investment. Yet most of the companies set up during the pandemic have nothing to do with Silicon Valley or its pretenders. They are construction firms, consultancies and the like.
Three explanations for the startup boom stand out. The first relates to family finances. From about 2017 onwards labour markets in the rich world noticeably strengthened, putting money in workers’ pockets. Then governments plumped the cushion considerably, as they handed out vast amounts of cash via stimulus cheques or furlough schemes in 2020 and 2021. At the same time, people cut back on spending. The result was a huge rise in saving, and an acceleration in startups. The second factor relates to economic reallocation. The pandemic has prompted profound changes in consumption habits, meaning that demand has shifted across both geographies and industries. The third explanation is hard to measure, but could have the longest-lasting effects. The pandemic, by reminding people that life is short, may have encouraged them to take more risks.
3 key takeaways from the article
- The pandemic appears to be provoking a shift towards higher levels of entrepreneurship around the rich world.
- With global venture capital booming, startups from Triple Whale (e-commerce) in Columbus, Ohio, to Payrails (fintech) in Berlin are receiving lots of investment. Yet most of the companies set up during the pandemic have nothing to do with Silicon Valley or its pretenders. They are construction firms, consultancies and the like.
- Three explanations for the startup boom stand out: increasingly strengthened labor markets after 2017, government stimulus checks and people cut back on spending put a lot of money into their pockets; profound changes in consumption habits; and the pandemic, by reminding people that life is short, may have encouraged them to take more risks.
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Topics: Startups, Entrepreneurship, Global Economy
Tech talent tectonics: Ten new realities for finding, keeping, and developing talent
By Sven Blumberg et al., | McKinsey & Company | April 14, 2022
Late last year, Facebook announced plans to hire 10,000 people in Europe to build out its “metaverse,” an augmented-reality space – Facebook is not the only which is hiring tech talent. Exacerbating this issue is the Great Attrition, which is already being felt in many companies as tech talent streams out the door to pursue better opportunities. For many companies, these moves come with a big warning: there is a massive push happening to grab talent, and you may be missing out. These seismic shifts come at a time when the shortfall for tech talent is already acute. For instance, globally more than three million cybersecurity positions were unfilled as of 2020.. Business leaders are feeling the heat. According to a McKinsey survey of more than 1,500 senior executives globally, some 87 percent say their companies are not adequately prepared to address the skill gap. And according to another McKinsey survey, 61 percent of HR professionals believe hiring developers will be their biggest challenge in the years ahead.
Despite the formidable challenges in finding tech talent, incumbent companies cannot expect to succeed in the digital world without being technologically strong, which is simply not possible without a deep bench of tech talent. In fact, developing robust people and talent strategies are among the highest-value actions a business can take. Tech talent, therefore, should be a CEO’s top priority. Based on the authors’ work on more than 80 technology-talent transformations, they have identified a five realities companies need to face and five strategies regarding how to address them.
- You can’t be good at just one aspect of talent management and expect to succeed.
- Close your talent gap; it’s wider than you think
- Think candidate experiences, not recruiting process
- Top talent is interviewing you, not the other way around
- You can’t hire or outsource your way out of your talent problems
Five strategic suggestions are:
- Build small, empowered teams with a clear mission, and let them execute
- Eliminate meaningless toil and bad practices—top talent won’t put up with it
- Focus on developer happiness, and productivity and performance will follow
- Stop turning great engineers into bad managers
- Diversity, equity, and inclusion (DEI) are strategic necessities, not special initiatives
3 key takeaways from the article
- Tech talent streams out the organizations’ door to pursue better opportunities. Such seismic shifts come at a time when the shortfall for tech talent is already acute.
- Five realities companies need to face with respect to their hunt for tech talent: you can’t be good at just one aspect of talent management and expect to succeed, close your talent gap; think candidate experiences, not recruiting process, top talent is interviewing you and you can’t hire or outsource your way out of your talent problems.
- Five strategies regarding how to address them: build small, empowered teams with a clear mission, and let them execute; eliminate meaningless toil and bad practices—top talent won’t put up with it; focus on developer happiness, and productivity and performance will follow; stop turning great engineers into bad managers; and diversity, equity, and inclusion (DEI) are strategic necessities, not special initiatives.
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Topics: Technology, Talent, Business Model, Strategy
Oil just dropped below $98 a barrel and analysts are now backing away from their $200 predictions
By Sophie Mellor | Fortune Magazine | April 25, 2022
In a whiplash turn, oil has again sunk below $100 a barrel as fears of a COVID-19 lockdown in China’s capital ease the global demand crunch. The oil price downturn comes after a rise in the number of COVID-19 cases in China’s capital Beijing prompted mass-testing, lockdown rumors, and panic-buying. In Shanghai, the Shanghai composite stock index saw its worst day since February 2020 after the city reported record daily deaths over the weekend. In addition to a drop in demand for oil in China—the world’s biggest crude importer—analysts believe the Ukraine War and surging inflation are also destroying the demand for oil.
Rystad Energy, a research firm, estimates oil demand will drop around 1.4 million barrels per day with a rebound unlikely until at least 2023. It projects annual world average of oil demand will hit 99.6 million barrels per day, dropping well below the pre-pandemic high of 100.2 million barrels set in 2019. And as GDP growth is further weighed down by COVID-19 related lockdowns and geopolitical issues—the International Monetary Fund recently downgraded its 2022 world GDP growth forecast from 4.4% to 3.6%—global oil demand will continue to feel downward pressure.
Oil has also weakened on the prospect of higher U.S. interest rates. A strong U.S. dollar makes dollar-priced commodities like oil more expensive for other currency holders and increases risk aversion among investors. But China’s lockdown policy is the greatest threat to rising oil prices, as millions of residents in a Beijing district were told to submit to three days of virus testing starting Monday, stoking fears of another city-wide lockdown.
Falling oil prices have been welcomed by the Western world, which was grappling with rising inflation even before many countries shut off the tap to Russian oil following the country’s invasion of Ukraine.
3 key takeaways from the article
- In a whiplash turn, oil has again sunk below $100 a barrel as fears of a COVID-19 lockdown in China’s capital ease the global demand crunch. In addition to a drop in demand for oil in China—the world’s biggest crude importer—analysts believe the Ukraine War and surging inflation are also destroying the demand for oil.
- Rystad Energy, a research firm, estimates oil demand will drop around 1.4 million barrels per day with a rebound unlikely until at least 2023.
- The International Monetary Fund recently downgraded its 2022 world GDP growth forecast from 4.4% to 3.6%—global oil demand will continue to feel downward pressure.
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Topics: Oil, Global Economy, Inflation, China, Ukraine
Strategy & Business Model
When Your Business Needs a Second Growth Engine
By James Allen and Chris Zook | Harvard Business Review Magazine | Issue May–June 2022
Chief executives of large companies around the world are becoming increasingly preoccupied with obsolescence and renewal. Predicting competition from non-traditional sectors and their unorthodox business models would pose a major threat to their firms’ core business. Hence most of the CEOs very rightly projected that in the next decade 40% of the value their companies created would come from entering new markets and launching new business models. Clearly, the business landscape feels highly unstable to them—which is understandable, given that new technologies continue to upend industries and wipe out businesses at a remarkable rate.
The good news is that there has never been a better time for companies to try to build new engines of profitable growth. One reason is money is becoming increasingly abundant. Global investment capital had tripled in the past three decades and stood at 10 times global GDP. In addition, high-growth industries today don’t require as much investment as they once did; disruptive businesses can scale up faster in size and power with less capital.
In the past the most reliable way for businesses to find their next wave of growth was to mine their one or two strongest core businesses and apply their most distinctive capabilities in adjacent markets. Yet recently, the success pattern begin to change. More businesses with strong, growing cores are learning the art of building large new cores—what the authors call engine twos. To be sure, the old playbook of expanding from the core into adjacencies will remain durable for many companies. But change and disruption now happen so fast that it’s very difficult to be certain that your company will be one of them. That makes finding a successful second core an imperative.
Three distinct archetypes of successful engine twos are: first, next-generation versions of original core businesses, or engine ones. A second form involved moving into a market that historically was just minimally related to the engine one business. The third engine-two pattern involved building a brand-new business almost completely unrelated to the engine one.
Four foundational elements were instrumental in the success of all three types of engine twos. These are: a target market with large profit potential, should have sustainably different and better business models, an entrepreneurial mindset, and the ability to leverage the scale and assets of engine one.
3 key takeaways from the article
- Minning one or two strongest core businesses and applying their most distinctive capabilities in adjacent markets remained the most reliable way for businesses to find their next wave of growth. More businesses with strong, growing cores are learning the art of building large new cores—called as engine twos.
- Three distinct archetypes of successful engine twos are: next-generation versions of original core businesses, or engine ones; moving into a market that historically was just minimally related to the engine one business, and building a brand-new business almost completely unrelated to the engine one.
- Four foundational elements instrumental in the success of all three types of engine twos are: a target market with large profit potential, should have sustainably different and better business models, an entrepreneurial mindset, and the ability to leverage the scale and assets of engine one.
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Topics: Strategy, Strategic Advantage, Business Model, Growth
Leading & Managing Section
Improve Creative Brainstorming With Constructive Criticism
By Jared R. Curhan | MIT Sloan Management Review | March 29, 2022
Anyone who has ever participated in a group brainstorming session knows the ground rules: Focus on quantity, not quality. Be open to far-fetched, outlandish ideas. And above all, don’t criticize. Those principles were conceived in the late 1940s by Alex Osborn, a partner at the esteemed New York City advertising agency BBDO and the unofficial godfather of brainstorming.
Recent research, however, has cast doubt on Osborn’s “no criticism” rule. A growing number of studies show that criticism might actually heighten creativity and imagination. Forcing participants to suspend judgment about the quality of ideas during brainstorming could in fact stifle free thinking and expression. So does criticism help or hinder creativity in brainstorming? The author and his colleagues set out to resolve this long-standing debate. Their latest research suggests that the answer depends on the brainstorming context — either cooperative or competitive.
When the brainstorming environment is cooperative — meaning that the group members’ goals are aligned — criticism is likely to stimulate creativity. Criticism can indeed have a negative effect on creativity if the nature of the group or its task is competitive, mainly because the criticism may be construed as destructive and can trigger intragroup conflict.
Leaders need to fully understand their team’s dynamics and adapt brainstorming instructions accordingly to benefit most from the group’s setting and context. For example, if team members are generally collaborative and supportive of one another, then encouraging a bit of criticism and debate could help spark new ideas. But if team members tend to be competitive with one another, then encouraging criticism and debate could backfire.
To be sure, there is no one-size-fits-all, best way to brainstorm. Much depends on the organizational context and the nature of the brainstorming task. In some scenarios, it might be best for managers to assign one team to come up with ideas freely (with criticism encouraged) and another team to review those ideas and select the best ones. Yet, taken together, our findings suggest that the optimal context for creativity in brainstorming is a cooperative one in which criticism occurs but is interpreted constructively by parties who understand that they are working toward the same goal.
3 key takeaways from the article
- Anyone who has ever participated in a group brainstorming session knows the ground rules: Focus on quantity, not quality. Be open to far-fetched, outlandish ideas. And above all, don’t criticize.
- Recent research, however, has cast doubt on “no criticism” rule. A growing number of studies show that criticism might actually heighten creativity and imagination.
- When the brainstorming environment is cooperative — meaning that the group members’ goals are aligned — criticism is likely to stimulate creativity. Criticism can indeed have a negative effect on creativity if the nature of the group or its task is competitive, mainly because the criticism may be construed as destructive and can trigger intragroup conflict.
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Topics: Critical Thinking, Brain Storming, Teams
Changing Your Beliefs Can Change Your Life
By Joe DiDonato | Forbes Magazine | April 25, 2022
Henry Ford is often quoted as saying: “If you think you can or you think you can’t, you’re right.” When we find ourselves plagued with a little internal voice constantly casting doubt, it can be challenging to invest in our abilities. But studies continue to demonstrate the impact this belief in our own abilities can have on our reality. The author has shared three cases that have inspired and surprised him. And according to him, these are just a few examples of the ways a shift in your beliefs can liberate your thinking.
The Power Of A Parent’s Belief: Barry Neil Kaufman rose to fame for his award-winning book Son-Rise which tells the profoundly moving story of the work he and his wife Suzi accomplished with their once-autistic son. At a young age, the boy was nonverbal, and doctors measured his IQ to be below 30. Experts lined up to tell the Kaufmans that their son’s condition was incurable and irreversible. Through devotion and hard work—and by actively challenging these beliefs—the Kaufmans eventually saw their son transform into a verbal, extroverted happy teenager with a near-genius IQ.
The Effects Of Conviction On Behavior And Ability: In his second book Happiness is a Choice, Kaufman credits Judith Hooper’s and Dick Teresi’s book The Three Pound Universe with first prompting him to reconsider the profound ramifications of our convictions and attitudes. This work cites cases in a 1980s study conducted by the National Institute for Neurological and Communicative Disorders and Stroke on people exhibiting multiple personalities. The study includes some shocking findings. One woman in the NINCDS study exhibited three distinct personalities. She was observed to have three menstrual periods each month due to her condition. Another man with the condition required multiple eyeglass prescriptions, shifting even between nearsightedness and farsightedness in the span of a day. A third man, depending upon the personality assumed at the time, could either eat citrus fruits without any disturbance or suffer severe hives, convulsions and seizures. Conclusion is if our beliefs and convictions could possibly hold the capacity to affect such fundamental biological experiences as menstrual cycles, eyesight and allergies, what sway might my outlook hold over my happiness, life and career?
A Standardized Test And A Twist Of Fate. This is the story of one of the most successful magazine entrepreneurs in the world. He was raised by a single mom in the Midwest and had always struggled academically, almost to the point of flunking out. Once, his mom asked him to promise that he would take the SATs. He didn’t expect great scores and only took them out of a sense of obligation to his mother. In a twist of fate, this man somehow managed to score 1480/1600, right up with the best and brightest. It took those SAT scores to convince him that he must be smart. Otherwise, how could he have scored that high? So, he started to behave in ways that reflected this new conviction. He chose different friends and showed up for his classes. He eventually went to an Ivy League college and became the successful head of a huge magazine empire. But that’s not the story. Twelve years later, he was notified that there had been an error in his score. It turned out his actual score had been 740. If that doesn’t make you stop and think, I don’t know what will.
3 key takeaways from the article
- Henry Ford is often quoted as saying: “If you think you can or you think you can’t, you’re right.”
- When we find ourselves plagued with a little internal voice constantly casting doubt, it can be challenging to invest in our abilities. But studies continue to demonstrate the impact this belief in our own abilities can have on our reality.
- If you can change your thinking down in your core, it may hold the power to change the world. What you once thought impossible just might suddenly prove possible.
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Topics: Personal Development, Beliefs
Entrepreneurship
5 Tips for a Successful Negotiation (and How to Strengthen Your Position)
By Angelica S. Gutierrez | Inc Magazine | April 25, 2022
Not knowing how, when, or what to negotiate can be costly. In addition to the advice i.e., never entering a negotiation from which you’re unwilling to walk away, there are 5 tips you as an entrepreneur can do before and during a negotiation to strengthen your position.
- Secure a BATNA. There is a lot of psychology in negotiations. People who secure a Best Alternative to a Negotiated Agreement (BATNA)– which is the option a party has if the negotiation ends in an impasse–tend to have a strong negotiation position. There is power in knowing that one can be assertive in a negotiation because they have already secured another option should the present negotiation fail.
- Identify issues. In a negotiation, an issue(s) refer to the tangibles over which parties negotiate and that typically go into a contract. Prior to starting a negotiation, it is imperative to carefully consider the issues that you would like to negotiate. These issues should be the tangibles that will address your interests.
- Articulate interests. One of the reasons why negotiations end in an impasse is that parties are fixated on their position — i.e., stating what they want. Instead, consider articulating your interests — i.e., stating why you want what you want. Take a moment to identify your needs, concerns, and other reasons that underlie your position. By sharing these interests with the other party during the negotiation, you’ll give the other party the opportunity to introduce additional issues that perhaps you had not considered but may nevertheless address your interests.
- Establish a resistance point (a.k.a. reservation price). Part of the preparation for negotiating will entail establishing your resistance point, which is essentially your bottom line. If you are negotiating with a supplier, your resistance point will be the maximum amount that you are willing to pay. If you are negotiating with a client, it will be the minimum that you are willing to accept for payment.
- Establish a target point (a.k.a aspiration level). Your resistance point is as important as your target point. The target point is essentially your ideal outcome — the amount that you would like to either pay or be paid. Whereas your target point is what you believe something is worth, your resistance point is what the market says it’s worth. Always start a negotiation by disclosing your target point, not your resistance point.
2 key takeaways from the article
- Not knowing how, when, or what to negotiate can be costly.
- In addition to the advice i.e., never entering a negotiation from which you’re unwilling to walk away, 5 tips you as an entrepreneur can do before and during a negotiation to strengthen your position are: secure a Best Alternative to a Negotiated Agreement, carefully consider the issues that you would like to negotiate, articulate your interests — i.e., state why you want what you want, establish your resistance point, which is essentially your bottom line, and establish a target point – essentially your ideal outcome.
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Topics: Negotiation, Personal Development, Entrepreneurship
These Product Launches Tell Us Exactly How To Go About It
By Ronald Kaufman | Entrepreneur Magazine | April 25, 2022
When startups or existing businesses decide to launch a new product, it starts off as an idea with a hypothesis that it would meet a pressing need in the market. Almost 95 per cent of the time, these hypotheses are wrong and the product fails. To minimize the chances of failure, businesses can follow these 7 steps to successfully launch their new product.
- Do detailed market research:You need to develop a user persona. A perfect avatar of your customers. How and where they live their lives, their income level, technological literacy, etc.
- Define the positioning of your product: It’s a good time to define your product’s positioning. It won’t solve all the users’ problems but which specific problem should you address first and how?
- Sell your hypothesis and positioning to stakeholders: Some product ideas require funding or approval from the board or top management. Without their approval, you may be considered a rogue employee. This can turn your entire idea and effort from innovative to derogatory. So, take the time to sell the idea to these stakeholders and secure their approval.
- Develop a go-to-market strategy: Building a product is not enough. Being able to integrate it into an existing market is very important. When working on a new product idea, you should develop a strategy for integrating it into the market. This includes optimized marketing, pricing structure, and others.
- Set a launch date and define your launch goals: Product launch can linger for Lord-knows-how-long. A typical product team has the tendency to overextend launch time because a part of them believe the product can be made better. So, they keep tweaking until it’s never launched. Setting a launch date even before the product development begins can help you avoid that trap.
- Pre-market your product to build anticipation: Just before the launch, it’s a great idea to create some buzz around what you are building. This will stir the market’s anticipation for your product and increase their willingness to try it out after launch.
- Launch and collect feedback from users: Some of the best product launches are nowhere near perfect. Most are launched in the beta phase, where a few customers are given access to the product and feedback is collected for reiteration and improving the product. This is important because you get to fix some minor issues with the product before the broader market gets to really use it.
2 key takeaways from the article
- When startups or existing businesses decide to launch a new product, it starts off as an idea with a hypothesis that it would meet a pressing need in the market. Almost 95 per cent of the time, these hypotheses are wrong and the product fails.
- To minimize the chances of failure, businesses can follow the following 7 steps to successfully launch their new product: do detailed market research, define the positioning of your product, sell your hypothesis and positioning to stakeholders, develop a go-to-market strategy, set a launch date and define your launch goals, pre-market your product to build anticipation, launch and collect feedback from users.
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Topics: Entrepreneurship, New Product Launch
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