Weekly Business Insights from Top Ten Business Magazines – Week 251

Extractive summaries of and key takeaways from the articles curated from TOP TEN BUSINESS MAGAZINES to promote informed business decision-making | Week 251 | July 1-7, 2022

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Shaping Section : Ideas and forces shaping economies and industries

Venture capital’s reckoning

The Economist | June 30, 2022

The venture-capital bull run of the past two decades transformed what was once a cottage industry in Silicon Valley into a huge machine for building globally dominant companies. Now the war in Ukraine, China’s purging of its tech industry and rising interest rates mean capitalism’s moon-shot machine is earthbound. Public markets were the first to be hit. The nasdaq index, which is weighted towards technology companies, has fallen by nearly 30% so far this year in a gruesome reckoning. The amount of capital raised through initial public offerings so far in 2022 is down by about 50% globally and by more than 70% in America compared with the same period last year.

The public-market bloodbath is inevitably hurting the vc world. Losses in end-investors’ public portfolios put pressure on their private ones. Pension funds and endowments that committed large amounts of “dry powder” to private markets are trying to preserve cash by asking vcs to slow their pace of investing.  

Startups that rely on vc cash are, unsurprisingly, feeling the pain. Fledgling firms with little cash saved, especially in competitive sectors such as food delivery, will fare worst. And after a long boom, expect some dubious behaviour to be revealed. One concern is how interlinked tech firms might be.  

Pessimists note that vc slumps take years to bottom out.  Yet despite all this, the correction will not be as bad as the crash of 2000-01. For one thing, plenty of startups have built up war chests and so have healthy balance-sheets. Assuming a typical cash-burn rate, all but three of the 70-odd biggest software startups have raised enough funds to last until 2025.

The vc industry is more institutionalised, too. Self-sustaining vc networks from Europe to Asia are less dependent on flighty American capital and have enduring links to local financial firms and entrepreneurs. End-investors such as pension funds and endowments have experienced enough of tech’s transformative effect on the economy to know not to run away.

Most important, the opportunity for innovation remains vast. The potential market for technology products has expanded hugely, beyond the bastions of business and consumer computing, to affect all parts of the business world, from biotech to supply-chain monitoring. What emerges from the chaos will be a leaner and more efficient industry—and one that will remain a powerful force.

3 key takeaways from the article

1. The venture-capital bull run of the past two decades transformed what was once a cottage industry in Silicon Valley into a huge machine for building globally dominant companies. 
2. Now the war in Ukraine, China’s purging of its tech industry and rising interest rates mean capitalism’s moon-shot machine is earthbound. Public markets were the first to be hit. The Nasdaq index, which is weighted towards technology companies, has fallen by nearly 30% so far this year in a gruesome reckoning.
3. The public-market bloodbath is inevitably hurting the VC world.  Yet despite all this, the correction will not be as bad as the crash of 2000-01. Because, plenty of startups have built up war chests, the VC industry is more institutionalized, and most important the opportunity for innovation remains vast.

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Topics:  Entrepreneurship, Startups, Venture Capitalists

Economic conditions outlook, June 2022

By Krzysztof Kwiatkowski et al., | McKinsey & Company | June 29, 2022 

Just one quarter after geopolitical conflicts and instability overtook the COVID-19 pandemic as the leading risk to economic growth, survey respondents’ concerns over inflation now exceed their worries about the effects of geopolitical issues on their countries’ economies. In the latest McKinsey Global Survey on economic conditions, respondents also see inflation as a growing threat to the global economy and continue to view geopolitical instability and supply chain disruptions among the top threats to both global and domestic growth.  Few of the major findings of the survey are:

Geopolitical conflicts and instability remain an outsize concern in Europe, where 50 percent list it among their top risks. But even in Europe, inflation is the risk cited most often—as it is in every geography except Greater China.3 There, respondents most often point to the COVID-19 pandemic.

Supply chain disruptions round out the top three global risks, followed by volatile energy prices and rising interest rates. For the second survey in a row, more than three-quarters of respondents expect interest rates in their countries to increase in the next six months.  Respondents also see supply chain disruptions as major obstacles for their companies’ growth. In the latest survey, that answer choice has overtaken geopolitical instability as the most-cited risk to companies’ growth. These supply chain concerns—and those about the changing trade environment and relationships—are much more common among respondents who say at least some of their companies’ essential materials are produced in China than among those who don’t source materials from China.

Respondents’ takes on both current and future conditions in the global economy have grown progressively gloomier since June 2021, with half of all respondents expecting conditions to worsen in the second half of 2022.  Views vary widely by region, however. In both Asia–Pacific and Greater China, about two-thirds of respondents say their countries’ economies have improved although overall optimism has declined since the previous survey. The responses from Europe and North America are much more downcast: just one in five respondents in each region report recent improvements in their economies.

3 key takeaways from the article

1. Just one quarter after geopolitical conflicts and instability overtook the COVID-19 pandemic as the leading risk to economic growth, survey respondents’ concerns over inflation now exceed their worries about the effects of geopolitical issues on their countries’ economies. 
2. In the latest McKinsey Global Survey on economic conditions, respondents also see inflation as a growing threat to the global economy and continue to view geopolitical instability and supply chain disruptions among the top threats to both global and domestic growth.
3. Overall, pessimism about the second half of 2022 is on par with the early months of the pandemic in 2020. Exceptionally, however, the mood is much more positive among respondents in Asia–Pacific and Greater China, who report improvements and continue to be upbeat about their economic prospects, as compare to Europe and North America.

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Topics:  Global Economy, Inflation, Political Risk, Supply Chain

Warren Buffett-backed BYD surpasses Tesla in global EV sales a decade after Elon Musk doubted the Chinese company’s technology

By Grady Mcgregor | Fortune Magazine | July 6, 2022

BYD, the Chinese electric vehicle firm partly owned by Warren Buffett’s Berkshire Hathaway, became the world’s largest electric vehicle maker in the first half of 2022, wrestling the title from Elon Musk’s EV giant Tesla in another sign of the Chinese automaker’s resilience in the face of COVID-inflicted disruptions that plagued its rivals this year.  BYD sold 641,350 new electric vehicles in the first half of this year, compared to Tesla’s 564,743, company filings show. Sales at BYD are also growing at a faster pace than at its American counterpart.

However, the companies’ sales don’t represent an apples-to-apples comparison. Many of BYD’s car sales are plug-in hybrids and use gasoline engines to supplement battery power. Tesla, on the other hand, exclusively sells fully electric cars. China counts both types of vehicles as “zero-emission.”

BYD’s stock price in Hong Kong has barely budged since the firm released the sales figures earlier this week. But investors have been high on BYD since the start of this year despite of the bear market in the U.S. and a challenging environment in China. BYD’s stock price has risen nearly 25% since the start of this year. In that same time frame, Tesla’s stock price in New York has dropped 42%.

Tesla has attributed its sluggish growth early this year to COVID-19 lockdowns in Shanghai that disrupted production at its gigafactory near the city.  On the earnings call, Musk also promised that Tesla’s Shanghai plant would “come back with a vengeance.”  But Tesla’s comeback has not arrived fast enough to catch up with BYD’s spring surge.  Unlike Tesla, BYD was “totally resilient from the Shanghai City lockdown and [the] sector’s supply chain disruption.  BYD’s supply chain was “vertically integrated,” meaning it produces more parts in-house and is less dependent on outside suppliers, than its rivals, helping shield the company from supply chain disruptions. BYD’s supply chain success may be helping turn its competitors into potential customers.

BYD’s insulation from the Shanghai lockdown helped it leapfrog rivals to become the second-largest automaker of any kind this June. It now ranks behind only FAW-Volkswagen in terms of monthly car sales.

3 key takeaways from the article

1. BYD, the Chinese electric vehicle firm partly owned by Warren Buffett’s Berkshire Hathaway, became the world’s largest electric vehicle maker in the first half of 2022, wrestling the title from Elon Musk’s EV giant Tesla. 
2. Tesla has attributed its sluggish growth early this year to COVID-19 lockdowns in Shanghai that disrupted production at its gigafactory near the city. Musk promised that Tesla’s Shanghai plant would “come back with a vengeance.”  But Tesla’s comeback has not arrived fast enough to catch up with BYD’s spring surge.  
3. Unlike Tesla, BYD was “totally resilient from the Shanghai City lockdown and [the] sector’s supply chain disruption.  Further to this, BYD’s supply chain was “vertically integrated,” meaning it produces more parts in-house and is less dependent on outside suppliers, than its rivals, helping shield the company from supply chain disruptions.

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Topics:  Auto Market, Electric Vehicles, China, Tesla

Will Online Degrees Threaten the Traditional MBA? What Experts Say

By MIT SMR Strategy Forum | MIT Sloan Management Review | June 29, 2022

Business practitioners and publications have periodically questioned the value and future of the MBA degree, but profound pandemic-driven changes in the education industry have made it a relevant question once again. The authors turned to the MIT Sloan Management Review Strategy Forum panelists for their perspectives on the notion that online education and specialized degrees will supplant the traditional two-year full-time MBA.

A small fraction (16%) of our panelists agreed to some extent that, yes, specialized and online programs will in fact supplant the traditional MBA experience — for some. The traditional MBA does not serve all needs, says Tobias Kretschmer of LMU Munich. “Two-year full-time MBA degrees taken at a specific point in someone’s career are incompatible with the idea and ambition of lifelong learning and careers that do not follow an established linear trajectory,” he asserts.  However, even those panelists who agreed on this front were clear in specifying that certain MBA programs will remain desirable. The traditional two-year full-time MBA is likely to survive at elite schools as a loss leader — with generous financial aid to attract top students, burnishing those elite brands and driving scale for their online/specialized offerings, according to the one of the penalists.

Just one of our panelists was undecided on the impact of alternative programs. 

The majority of panelists — a full 80% — disagreed that alternative educational options would supplant the traditional MBA, with many noting the unique value of an in-person degree program.  A flurry of comments supported this notion including “genuine, spontaneous human interactions” of the classroom, the importance of “personal, face-to-face human interactions … to build trust and comfort”, and the “networking opportunities that, for people who don’t know each other‚ can only happen in person.” 

Clearly, the online experience — at least for now — cannot replicate many invaluable elements of in-classroom MBA programs. Is the MBA dead? No, not at the moment. In fact, notes Andrea Fosfuri of Bocconi University, “After many years of decline, MBA applications worldwide have increased recently.” But as online and specialty options continue to grow, we expect that the question will remain evergreen.

3 key takeaways from the article

1. Business practitioners and publications have periodically questioned the value and future of the MBA degree, but profound pandemic-driven changes in the education industry have made it a relevant question once again. 
2. The authors turned to the MIT Sloan Management Review Strategy Forum panelists for their perspectives on the notion that online education and specialized degrees will supplant the traditional two-year full-time MBA.
3. The study revealed a small fraction (16%) of the panelists agreed to some extent that, yes, specialized and online programs will in fact supplant the traditional MBA experience — for some.  The majority of panelists — a full 80% — disagreed that alternative educational options would supplant the traditional MBA, with many noting the unique value of an in-person degree program.  But as online and specialty options continue to grow, the question will remain evergreen.

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Topics: Education, MBA, Online Degree

Strategy & Business Model Section

How to Mix Strategy Sessions With Karaoke at a Modern Company Retreat

By Ryan Cavataro | Bloomberg Businessweek | 20 June 2022

Welcome to the modern company retreat. The events are becoming more popular in the remote-work era, as organizations look for ways to foster camaraderie and reinforce corporate culture among workers who don’t get to connect regularly at the office. Gone are the staid speeches, hotel ballrooms, and enormous conference centers that once featured prominently at retreats. Itineraries now typically involve lots of unstructured time with colleagues in unusual locales with activities such as scavenger hunts and dragon boat races.  Five tips to avoid pitfalls and get the most out of retreats.

1. Plan Far Ahead.  As any recent traveler can attest, airports are bustling, and hotels are booked up in advance. Supply is tight for venues that can accommodate more than 50 attendees—a typical group size for a company team or the entire workforce of a startup. Planning at least six months in advance for what can be akin to a five-day wedding celebration. Spring and fall are the best times of year to avoid conflicting with family summer trips and winter holidays.
2. Map Out Your Goals.  Determine what you and your team want to get out of the trip. It could be two things. The first is creating an experience where all of your employees fly home, feeling more inspired and connected to the vision of the company. The second is feeling like they have a real human connection with eight people that they didn’t know before.
3. Location, Location, Location.  While the prospect of a company-sponsored trip to Switzerland or Greece may sound tantalizing, traveling internationally is complicated.
4. Pick Your Price Point.  As with any getaway, decide how much to spend from the outset. An international trip including flights, stay, and activities can easily reach $1,000 per person a night, according to Hoff. That translates to upwards of $300,000 for a four-night retreat for 75 employees. 
5. Potential Pitfalls.  Organizers recommend setting clear and firm guidelines on behavior. Employees may be tempted to let loose in a foreign country or remote campground, but a corporate retreat is still a work event.

3 key takeaways from the article

1. Welcome to the modern company retreat. The events are becoming more popular in the remote-work era, as organizations look for ways to foster camaraderie and reinforce corporate culture among workers who don’t get to connect regularly at the office. 
2. Gone are the staid speeches, hotel ballrooms, and enormous conference centers that once featured prominently at retreats. Itineraries now typically involve lots of unstructured time with colleagues in unusual locales with activities such as scavenger hunts and dragon boat races.  
3. Five tips to avoid pitfalls and get the most out of retreats are: plan far ahead, map out your goals, location, location, location, pick your price point, and estimate potential pitfalls.

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Topics:  Event Market, Company Retreat, Remote Work, Organizational Culture

Leading & Managing Section

Is It Time to Consider Co-CEOs?

By Marc A. Feigen, et al., | Harvard Business Review Magazine | July–August 2022 Issue

For a long time the prevailing wisdom has been that companies need to be led by a single strong leader. Over the years some companies have put co-CEOs in charge, but not often.  Installing two decision-makers at the top, the theory goes, almost invariably leads to trouble, in the form of conflicts, confusion, inconsistency, irresolution, and delays.  Except that it often does.  The authors recently took a careful look at the performance of 87 public companies whose leaders were identified as co-CEOs. They found that those firms tended to produce more value for shareholders than their peers did. 

What are the right conditions for an effective partnership?  The authors’ research helped them to conclude that nine conditions can enable successful co-CEOs.

1. Willing Participants.  Co-CEOs need to be seriously committed to the idea of a partnership.
2. Complementary Skill Sets.  When boards today think about CEO succession, they often face a confounding choice between two talented leaders who have very different areas of expertise—both of which are necessary at the top. This is also important because when their skills overlap, conflict becomes more likely.
3. Clear Responsibilities and Decision Rights.  It’s also important to create separate areas of control, responsibility, and decision-making. The key to success is complementary domains of recognized competence.
4. To function, co-CEOs must agree up front on an approach to conflict resolution.
5. An Appearance of Unity.  Even when co-CEOs have a difference of opinion, they need to speak to their employees with a common voice, because disagreement among coequals can lead to confusion and indecision throughout the organization.
6. Fully Shared Accountability.  Both co-CEOs must be accountable for overall performance. Both should sign the quarterly financial statement, and they should be compensated equally. 
7. Co-CEOs need ongoing, nonintrusive backing from the board. 
8. Shared Values.  Co-CEOs fail when they have different values. To succeed, they need a relationship based on honesty, respect, trust, and compromise.
9. An Exit Strategy.  The co-CEO model can be hard to unwind, so developing a clear approach for changing course is vital.

3 key takeaways from the article

1. For a long time the prevailing wisdom has been that companies need to be led by a single strong leader. Over the years some companies have put co-CEOs in charge, but not often.  
2. Installing two decision-makers at the top, the theory goes, almost invariably leads to trouble, in the form of conflicts, confusion, inconsistency, irresolution, and delays.  Except that it often does.  A recent study found that the firms having co-CEOs tended to produce more value for shareholders than their peers did. 
3. Nine conditions that can enable successful co-CEOs are: willing participants, complementary skill sets, clear responsibilities and decision rights, agree up front on an approach to conflict resolution, an appearance of unity, backing from the board, shared values, and an exit strategy from co-CEOship.

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Topics: Leadership, Organizational Performance

Leadership Examples And Lessons From The First Black Army Secretary

By Edward Segal | Forbes Magazine | Jul 5, 2022

When Clifford Alexander, Jr., the first Black secretary of the Army, died Sunday at 88, he left behind several important examples and lessons for business leaders to follow.

1. Taking A Stand.  In 2009, Alexander called on President Barack Obama and Congress to repeal the Pentagon’s “Don’t ask, don’t tell” policy.  The policy was abolished in 2011.
2. Fighting Workplace Segregation And Discrimination.  Perhaps no American has done more to combat segregation and discrimination in private employment and the military. His dignity and resolve in the face of hatred were inspirational.
3. A Groundbreaking Career.  “If Alexander had influenced the only the political arena where he worked for decades, he still would be an inspiration today. However, the causes he fought for, like the Voting Rights Act, made a difference in the military, in workplaces, and on the streets in communities of color, as the civil rights movement grew and evolved.
4. Emulating A Model Of Progress.  Business leaders can learn from Alexander how valuable knowledge that is garnered in one position can fuel their next position, even when these subsequent roles are not identical in nature. And when implemented strategically, and with a focus on the elements that achieved the initial positive outcome, success can be duplicated a second time, to create [an] even greater impact.
5. And was an Advocate For Inclusion.

2 key takeaways from the article

1. When Clifford Alexander, Jr., the first Black secretary of the Army, died Sunday at 88, he left behind several important examples and lessons for business leaders to follow.
2. Five of these lessons are: taking a stand, fighting workplace segregation and discrimination, should have a groundbreaking career, emulating a model of progress from one area to another area, and advocating for inclusion.

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Topics:  Leadership, Discrimination, Inclusion

Enterpreneurship Section

New Jeff Bezos Movie Reminds Entrepreneurs of 3 Key Lessons When First Starting Out

By Melissa Angell | Inc Magazine | June 30, 2022

There’s a new Jeff Bezos biopic set to be released this summer that chronicles the Amazon kingpin’s endeavor to create an online book store that eventually expanded into an e-commerce empire. Curious entrepreneurs may want to tune in if interested in a small taste of Amazon’s beginnings.  While Bezos is most certainly not an Academy Awards contender, it does offer lessons for emerging entrepreneurs. Three of these are:

A company’s name is everything.  Amazon is named after the world’s largest river by volume–a nod to the entrepreneur’s eventual goal of becoming the everything store.  In the company’s early days, however, Bezos first set out to call the company Cadabra Inc. It was a play on “abracadabra,” an exclamation magicians yell out during a magic trick. That name ended up being panned when people started confusing it for the word “cadaver.” Bezos then looked toward a handful of other names until he gravitated to Relentless.com. In the movie, viewers watch Bezos leaf through the front of the dictionary until landing on the word “Amazon.”

Believe in your idea.  Bezos soared through the ranks at D.E. Shaw, eventually becoming the youngest senior vice president at the hedge fund. Bezos’s then-boss, David Shaw, was interested in the future of the internet, leading Bezos to research its value propositions and growth potential. He then stumbled upon a fact that the web was growing at 2,300 percent per year.  And so Bezos approached Shaw with his idea. Though it was not met with the enthusiasm that Bezos likely hoped for–Shaw tried to dissuade Bezos from leaving a financially secure position to plunge head-first into a startup. As it obvious to all, Bezos chose to ignore that advice.

Know your market, and know when to walk away.  When Amazon was first starting out, Barnes & Noble dominated the book-selling industry with hundreds of stores and roughly $2 billion in revenue in 1995 while independent booksellers were shuttering. Meanwhile, Bezos was setting out to create the largest online bookstore with few resources on-hand. Bezos met with Barnes & Noble chairman Leonard Riggio, who purportedly told the Amazon head that the brick-and-mortar giant would start their own website and crush Amazon.   B&N’s Riggio reportedly propositioned Bezos to work together–and the Bezos movie portrays this as well, showing a tense meeting between the two at which Riggio offers to acquire Amazon for $1 million before the startup even launched its website. Bezos walks away, emphasizing to his bewildered team that they must be onto something if they’ve already received a buyout offer this early on.

2 key takeaways from the article

1. There’s a new Jeff Bezos biopic set to be released this summer that chronicles the Amazon kingpin’s endeavor to create an online book store that eventually expanded into an e-commerce empire. 
2. Curious entrepreneurs may want to tune in if interested in a small taste of Amazon’s beginnings.  While Bezos is most certainly not an Academy Awards contender, it does offer lessons for emerging entrepreneurs. Three of these are:  a company’s name is everything, believe in your idea, and know your market, and know when to walk away.  

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Topics:  Entrepreneurship, Startup, Technology

10 Questions to Ask Yourself Before Starting Your Entrepreneurial Journey

By Yan Katcharovski | Entrepreneur | July 6, 2022

Younger generations are increasingly looking for meaning in their work. Aside from a promising big exit at the end of the road, entrepreneurship is attracting young talent in search of purpose and fulfillment.  Try answering the 10 questions below before starting your entrepreneurial journey:

1. Why do you want to start your own business?  Entrepreneurship is over-glorified and misrepresented on social media. In reality, it is about building a business that solves a problem for a consumer.
2. What is the problem that particularly you want to solve?  If you want to have a viable business, it is important to have a clear mission. Given the purpose of your project, you will have to learn about the real needs of your territory. Start by doing market research to understand what people face daily and expect as solutions.
3. What do you want to achieve?  Describe your ideal project. Imagine your project in the way that it could fully blossom, ignoring the current constraints. Through this exercise, project yourself one year from now and then two to three years from now. Identify as precisely as possible what you would like to achieve through the realization of this project.
4. Do you have the skills to implement your project?  Determining the proper skills also includes deciding on the skills you will capitalize on and those you will look for externally.
5. What are your needs? To make your project a reality, you will have several needs such as: to feel supported, to have a professional network, and especially, to have the money necessary to launch your business. Turn to people around you who can bring a solution, if required.
6. Who can help you? Take stock of your networks (personal and professional). You surely have people around who can help you in one way or another. Don’t delay it — contact them.
7. Is your project viable in the long term?  Starting a business is good, but being able to make a living from it is even better! It is essential to question the viability of your project. To know if you will be able to make a living from it and if it will work, the only way is to test it. 
8. What is the state of your market?  Conducting a market study will allow you to verify if there is a market and a real need for your product or service.
9. Who are your customers?  Determine beforehand the typical profile of your customers — in other words, to segment them. Once the theoretical analysis of your target is done, you will have to verify the theory on the ground through interviews.
10. How will you test your idea/activity?  Many entrepreneurs wait until they have the perfect offer before launching their business. Instead of waiting for everything to be perfect, think about how you can test your idea as soon as possible (for example, gather a community around you, create your own content, create a landing page, etc.). This will let you know if the project is worth investing time, money and extra energy into.

2 key takeaways from the article

1. Younger generations are increasingly looking for meaning in their work. Aside from a promising big exit at the end of the road, entrepreneurship is attracting young talent in search of purpose and fulfillment.  
2. Try answering the 10 questions below before starting your entrepreneurial journey:  why do you want to start your own business?  What is the problem that particularly you want to solve?  What do you want to achieve? Do you have the skills to implement your project? What are your needs? Who can help you?  Is your project viable in the long term?  What is the state of your market?   Who are your customers?  How will you test your idea/activity?

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Topics:  Entrepreneurship, Startup