Weekly Business Insights from Top Ten Business Magazines – Week 250

Extractive summaries of and key takeaways from the articles curated from TOP TEN BUSINESS MAGAZINES to promote informed business decision-making | Week 250 | June 24-30, 2022

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Shaping Section : Ideas and forces shaping economies and industries

A wave of unrest is coming. Here’s how to avert some of it

The Economist | June 23, 2022

The last time the world suffered a food-price shock like today’s, it helped set off the Arab spring, a wave of uprisings that ousted four presidents and led to horrific civil wars in Syria and Libya. Unfortunately, Vladimir Putin’s invasion of Ukraine has upended the markets for grain and energy once again. And so unrest is inevitable this year, too. 

Soaring food and fuel prices are the most excruciating form of inflation. So when food and fuel grow dearer, standards of living tend to fall abruptly. The pain is most intense for city dwellers in poor countries, who spend a huge part of their income on bread and bus fares. Unlike rural folk, they cannot grow their own crops—but they can riot.  Many governments want to ease the pain, but are indebted and short of cash after covid-19. The average poor country’s public debt-to-GDP ratio is nearly 70% and it is climbing. Poor countries also pay higher interest rates, which are rising. Some of them will find this unsustainable. The IMF says that 41 are in “debt distress” or at high risk of it.

The Economist has built a statistical model to examine the relationship between food- and fuel-price inflation and political unrest. It reveals that both have historically been good predictors of mass protests, riots and political violence. If our model’s findings continue to hold true, many countries can expect to see a doubling of unrest this year. 

If unrest spreads this year, it could add to the economic pain. Investors dislike riots and revolutions. One study finds that a big outbreak of political violence typically knocks a percentage point off GDP 18 months later. The damage is worse when protesters are angry about both politics and the economy combined.  Averting the coming explosions will be hard. A good start would be to scrap policies that discourage food production, such as price controls and export curbs.  Also, far less grain should be wastefully burned as biofuel.

Several countries are asking for bail-outs. International financial institutions must strike a tricky balance. Saying no could spell chaos—and do lasting harm. But so could bailing out woeful governments, by entrenching bad and unsustainable policies.

3 key takeaways from the article

1. The last time the world suffered a food-price shock like today’s, it helped set off the Arab spring, a wave of uprisings that ousted four presidents and led to horrific civil wars in Syria and Libya. Unfortunately, Vladimir Putin’s invasion of Ukraine has upended the markets for grain and energy once again. And so unrest is inevitable this year, too. 
2. If unrest spreads this year, it could add to the economic pain. Investors dislike riots and revolutions. One study finds that a big outbreak of political violence typically knocks a percentage point off GDP 18 months later.
3. Averting the coming explosions will be hard. A good start would be to scrap policies that discourage food production, such as price controls and export curbs.  Also, far less grain should be wastefully burned as biofuel.  And for  bail-outs the international financial institutions must strike a tricky balance.

Full Article

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Topics:  Global Economy, Inflation, Political Unrest

The Global Currency Wars Have Begun Because, Well, Inflation

By Amelia Pollard and Saleha Mohsin | Bloomberg Businessweek | 23 June 2022

The US dollar had been soaring—now up 7% for the year—as the Federal Reserve prepared to aggressively combat inflation. And so one by one, central bankers elsewhere, just as desperate to tame the relentless march of inflation in their own backyards, began sending not-so-subtle signals that they would for once welcome a stronger currency—which helps reduce the cost of imports by boosting buying power abroad. It’s a form of intervention so rare that their jawboning alone moved markets. On June 16, two of them upped the ante: Switzerland surprised traders with the first rate increase since 2007, sending the franc soaring to its highest level in seven years. Hours later, the Bank of England announced its own rate increase and signaled bigger hikes to come.

The foreign exchange world is calling it the “reverse currency war”—because, for more than a decade, countries sought the opposite. A weaker currency meant domestic companies could sell goods abroad at more competitive prices, aiding economic growth. But with the cost of everything from fuel to food to appliances soaring, strengthening buying power has suddenly become more important.

It’s a dangerous game. If left unchecked, this international competition threatens to trigger wild swings in the value of the most dominant currencies, handicap manufacturers that rely on exports, upend the finances of multinational companies, and shift the burdens of inflation around the world.

Developing countries, especially exporters such as Argentina and Turkey, are among the most vulnerable, says Harvard economics professor Jeffrey Frankel. A lot of emerging economies have more debt denominated in dollars than they do in their own currencies, he says: “That’s the worst of all worlds—to have your currency depreciate against the dollar when you have dollar debt.”

Exactly how much a stronger currency will even tamp down inflation remains unclear. The so-called pass-through rate—the degree to which a foreign exchange rate affects consumer price index—has proven minimal. But in an era of rampant inflation, it may do more good. A 10% gain in the dollar would’ve previously only damped inflation by about a half percentage point. Today, it could be “a full percentage point.”  Nevertheless, experts warn that any government intervention carries a high risk of failure.  Predicting how exchange markets may react to a given policy choice can often be a fool’s errand.

3 key takeaways from the article

1. The US dollar had been soaring—now up 7% for the year—as the Federal Reserve prepared to aggressively combat inflation. And so one by one, central bankers elsewhere, just as desperate to tame the relentless march of inflation in their own backyards.
2. The foreign exchange world is calling it the “reverse currency war”—because, for more than a decade, countries sought the opposite.
3. It’s a dangerous game. If left unchecked, this international competition threatens to trigger wild swings in the value of the most dominant currencies, handicap manufacturers that rely on exports, upend the finances of multinational companies, and shift the burdens of inflation around the world.

Full Article

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Topics:  Global Economy, Currency Market, Inflation

Strategy & Business Model Section

4 Common Reasons Strategies Fail

By Andrea Belk Olson | Harvard Business Review | June 24, 2022

Business strategies often fail. This is well-know by now: According to studies, some 60–90% of strategic plans never fully launch. The causes of derailment vary widely, but execution consistently bears the blame. While that can be — and perhaps often is — a fair diagnosis, it isn’t the whole story. The strategy design itself can be the real problem, however difficult that might be to admit.  Instead of reactively addressing failures during implementation, leaders need to examine whether the strategy was on solid footing in the first place. This requires stripping away assumptions to avoid four foundational errors that set strategies up to fail.

Error #1: Not understanding the problem.  A PR crisis might not simply be a branding problem; it can also be a leadership problem, for instance. The same goes for strategy. The entrance of new competitors, dramatic declines in sales, or technology disruptions may be viewed as reasons for a new strategy. Yet each of these are unique challenges that may or may not require a full-fledged revamp.  It is essential to deeply examine what circumstances require complete upheaval versus tailored refinements to the current strategy. Many times, it’s the latter. 

Error #2: Not understanding the organization’s capabilities.  According to Harvard Business School, 85% of executive leadership teams spend less than one hour per month discussing strategy and 50% spend no time at all. Creating an effective and executable strategy is a cultivated skill.  Without consistently immersing your leadership team in strategy and long-term thinking, their strategic capabilities will never become fully developed and will result in a plan with marginal effectiveness.

Error #3: Not understanding the immovable pressures.  Every organization has ongoing operational activities which keep the company running. In fact, there are often so many existing initiatives competing for employee time that it’s incredibly challenging to carve out time for strategy planning, much less implementation.

Error #4: Not understanding the cultural landscape.  An organization’s historical conditions provide employees with the guidelines for judging whether a new strategic plan has legs. Any new strategy introduced exists in the context of the plans that came before it. Therefore, its design must consider what precedent establishes its perceived success or failure. Leaders must also assess how the company culture will potentially impact the strategy, and account for those internal barriers as part of the rollout process.

2 key takeaways from the article

1. Business strategies often fail. This is well-know by now.  The causes of derailment vary widely, but execution consistently bears the blame. While that can be — and perhaps often is — a fair diagnosis, it isn’t the whole story. The strategy design itself can be the real problem, however difficult that might be to admit.  
2. Instead of reactively addressing failures during implementation, leaders need to examine whether the strategy was on solid footing in the first place. This requires stripping away assumptions to avoid four foundational errors that set strategies up to fail.  These errors are: not understanding the problem, not understanding the organization’s capabilities, not understanding the immovable pressures, and not understanding the cultural landscape.

Full Article

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Topics:  Strategy, Implementation, Culture

Leading & Managing Section

Maximize business value with data-driven strategies

By Matt Hobbs and Anil Nagaraj | MIT Technology Review | June 22, 2022

Every company is collecting data. But it’s not enough: companies must now start using that data to run every part of their business.  There’s more progress to be made.  What’s holding companies back? They’ve built up technical debt—investments in legacy systems that they’re reluctant to abandon; they can’t keep up with new technology innovations coming to market; and they’re concerned that their business can’t cope with change. There’s also a general lack of data literacy within companies, with many having trouble figuring out how to make data-based decisions and how to truly activate insights.  Here are five ways data-driven organizations can realize greater value.

1. Creating personalized customer experiences in physical and virtual worlds.  Whether it’s through ads or the front page of online stores of the retails, data-enabled personalization is only getting started.  Virtual environments like the metaverse are going to be the next emerging area that could offer a higher level of personalized customer experience.
2. Generating new revenue streams through data monetization.  While data monetization within the enterprise is a given, external monetization of information is a rapidly expanding business. For instance, consider a large bank and retailer working together to see how financial transactions influence purchasing habits. This data is valuable for retailers, but they can then sell that information to health-care providers, who can then leverage this data to track food habits and influence health and well-being.
3. Empowering sustainable decision-making.  Environmental, social, and governance (ESG) issues are making companies rethink the way they do business.  Many companies, for example, are using data to see whether they should build warehouses in a certain area or if climate change will eventually impact those operations.
4. Enhancing productivity.  The digital age is all about hyper-precision. By consolidating, analyzing, and leveraging the right quality data at the right time to assess, predict, and prescribe decisions, companies can significantly enhance productivity and the value of their resources.
5. Boosting product or service innovation.  When it comes to creating new products and services, data is a game changer. However, companies need to go beyond just big data and start looking at what’s called “thick data” to effectively influence product and service usage through human-centric design.  While big data is about capturing what people spent their money on, when they bought an item, and how much they paid, thick data is focused on human behavior and digs deeper into people’s motivations for buying something and the ways they use a product.

3 key takeaways from the article

1. Every company is collecting data. But it’s not enough: companies must now start using that data to run every part of their business.  There’s more progress to be made.  
2. What’s holding companies back? They’ve built up technical debt—investments in legacy systems that they’re reluctant to abandon; they can’t keep up with new technology innovations coming to market; and they’re concerned that their business can’t cope with change. There’s also a general lack of data literacy within companies, with many having trouble figuring out how to make data-based decisions and how to truly activate insights.
3. Five ways data-driven organizations can realize greater value:  creating personalized customer experiences in physical and virtual worlds, generating new revenue streams through data monetization, empowering sustainable decision-making, enhancing productivity, and boosting product or service innovation.

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Topics:  Technology, Data, Decision-Making, Leadership

Understanding Customers’ Experiences

CX without design only gets you halfway

By Ewan Duncan et al., | McKinsey & Company | June 21, 2022

In a world where consumer expectations are boundless and in flux, the stakes are high for delivering an exceptional customer experience (CX). Consequently, more and more organizations are becoming customer obsessed, prioritizing CX but often haphazardly innovating to meet their CX goals.

Few people would contest that design thinking on its own can spur lasting business value; yet an integrated approach to CX that combines traditional practices with user-centered design processes is largely overlooked. Marrying elements of both can bring tremendous value—and is, in fact, imperative to meeting customers’ needs today.  Indeed, how companies deliver to customers is as important as what they deliver: a great individual product will fall short if teams don’t design and measure the entire experience to meet customer expectations.  Companies looking to improve and prioritize CX should take action in three areas: build aspirations anchored in purpose, transform the business, and establish critical enablers to support and speed the transformation.  Here is how design informs each step in transforming the business while prioritizing CX.

1. Discovering customer needs and opportunities.  In a traditional CX process, the discovery phase involves mapping out the customer journey and identifying its pain points. This phase typically relies heavily on capturing and analyzing customer data and customer sentiment through customer-satisfaction surveys and online listening, such as monitoring reviews and social media. The CX team then develops ways to remedy problems and improve the experience. Design amplifies this process with intricate yet critical layers of customer insight and helps companies move quickly and precisely to create value in the following three ways: uncovering underlying motivations, leading with empathy, and driving innovation.
2. Designing and prototyping solutions.  Traditional CX prototyping takes the journey map and redesigns it, fixing pain points and streamlining the process. Design-empowered CX teams explore many alternative and innovative solutions that lead to sweeping rather than incremental improvements.   This approach starts with defining an optimal CX vision to gain alignment on the end-to-end experience across the customer journey, then reintroduces barriers such as technical viability to help prioritize elements of the experience that need to be improved.
3. Launch and scale.  Rather than launching a product, feature, or service at full scale, as traditional CX teams often do, design brings a test-and-learn approach that de-risks the solution and the impact to the business. An agile design-and-development approach that culminates with an MVP allows teams to better—and more quickly—understand what customers want and deliver it to them.

3 key takeaways from the article

1. Companies are putting renewed focus on delivering exceptional customer experience (CX), and many are attempting to do so with siloed CX and design teams.
2. When transforming their business to prioritize CX, companies will have the most success by marrying CX insights with user-centered design methods of researching, defining opportunities, generating ideas, and prototyping before launching and scaling.
3. A combined CX-design approach to discovering customer needs, designing solutions and journeys, and delivering customer impact will help companies create a seamless end-to-end experience that truly meets customers’ ever-evolving needs.

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Topics:  Marketing, Customer Experiences

Enterpreneurship Section

6 Tips on How to Disagree Without Being Disagreeable in the Tech Industry

By Steve Taplin | Entrepreneur Magazine | June 27, 2022

By definition, being disagreeable is to act in an unfriendly and bad-tempered way, often motivating negative feedback from others. It is essential to pass your point to the opposing team as a technology and business specialist without sounding unfriendly or bad-tempered. As a tech-savvy individual, you can expect to have disagreements about the impact of your creations on the lives of regular Tom, Dick and Harrys. Here are a few ways you can disagree without being disagreeable:

1. Practice active listening.  You need to listen keenly and process what the other person is saying. You can always learn something new about the subject matter during a debate, mainly because the tech industry constantly evolves and further information is available. You will also notice that actively listening to your counterpart gives you ideas on how to respond to their statement.
2. Don’t take it personally.  Taking the high road every single time is the best way to disagree without being disagreeable. If you match a rude colleague, you will undoubtedly escalate the matter, and no one wants that in the workplace.
3. Don’t just oppose your counterpart.  When disagreeing, you need to try to identify areas of your counterpart’s argument that you completely agree with, and tell them that you support those parts. You can also use phrases like “That is great thinking” which will help bring down the tension and help you win the argument. Remember, there is always something good to find in everyone.
4. Get the facts straight.  Starting an argument based on untrue or unverified facts makes you look incompetent and is, quite frankly, embarrassing. It is also unfair for your colleagues when you start a debate without doing your due diligence beforehand. If you do not have all the facts, it is wise to excuse yourself from a discussion and finish the conversation later when you have all the necessary information.
5. Look and act in a pleasant manner.  The first thing people notice is how you look.  You have already won half the battle if you look well-put together and act pleasantly.
6. Agree to disagree.  You may not always reach an amicable resolution to your arguments. If it’s possible, agree to disagree, and move on. If shrugging it off is not an option, try calling in a third party to help you choose a way forward that benefits most parties. If a third party does not allow you to find common ground, then the client’s wish should be honored or excuse from the agreement.

2 key takeaways from the article

1. By definition, being disagreeable is to act in an unfriendly and bad-tempered way, often motivating negative feedback from others. It is essential to pass your point to the opposing team as a technology and business specialist without sounding unfriendly or bad-tempered. 
2. As a tech-savvy individual, you can expect to have disagreements about the impact of your creations on the lives of regular Tom, Dick and Harrys. Six ways you can disagree without being disagreeable:  practice active listening, don’t take it personally, don’t just oppose your counterpart, get the facts straight, look and act in a pleasant manner, and agree to disagree.

Full Article

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Topics:  Communication, Negotiation, Technology