Extractive summaries of and key takeaways from the articles curated from TOP TEN BUSINESS MAGAZINES to promote informed business decision-making | Week 259|August 26-September 1, 2022
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Shaping Section : Ideas and forces shaping economies and industries
Are sanctions on Russia working?
The Economist | August 25, 2022
Six months ago Russia invaded Ukraine. On the battlefield a war of attrition is taking place along a thousand-kilometre front line of death and destruction. Beyond it another struggle is raging—an economic conflict of a ferocity and scope not seen since the 1940s, as Western countries try to cripple Russia’s $1.8trn economy with a novel arsenal of sanctions. The effectiveness of this embargo is key to the outcome of the Ukraine war.
Since February America, Europe and their allies have unleashed an unprecedented barrage of prohibitions covering thousands of Russian firms and individuals. Half of Russia’s $580bn of currency reserves lies frozen and most of its big banks are cut off from the global payments system. America no longer buys Russian oil, and a European embargo will come fully into effect in February. Russian firms are barred from buying inputs from engines to chips. Oligarchs and officials face travel bans and asset freezes. America’s “KleptoCapture” task-force has seized a superyacht that may have had a Fabergé egg on board.
Behind such ambitious goals lies a new doctrine of Western power. The unipolar moment of the 1990s, when America’s supremacy was uncontested, is long gone, and the West’s appetite to use military force has waned since the wars in Iraq and Afghanistan. Sanctions seemed to offer an answer by allowing the West to exert power through its control of the financial and technological networks at the heart of the 21st-century economy.
What are the results? On a three- to five-year horizon isolation from Western markets will cause havoc in Russia, for example. The trouble is that the knockout blow has not materialised. Russia’s GDP will shrink by 6% in 2022, reckons the IMF, much less than the 15% drop many expected in March, or the slump in Venezuela. Energy sales will generate a current-account surplus of $265bn this year, the world’s second-largest after China. After a crunch, Russia’s financial system has stabilised and the country is finding new suppliers for some imports, including China. Meanwhile in Europe, an energy crisis may trigger a recession. This week natural-gas prices rose by a further 20% as Russia squeezed supplies.
It turns out the sanctions weapon has flaws. One is the time lag. Blocking access to tech the West monopolises takes years to bite, and autocracies are good at absorbing the initial blow of an embargo because they can marshal resources. Then there is the blowback. Although the West’s GDP dwarfs Russia’s, there is no wishing away Mr Putin’s chokehold on gas. The biggest flaw is that full or partial embargoes are not being enforced by over 100 countries with 40% of world GDP.
You should therefore discard any illusions that sanctions offer the West a cheap and asymmetric way to confront China, an even bigger autocracy. Instead the lesson from Ukraine and Russia is that confronting aggressive autocracies requires action on several fronts. Nobody can counter aggression through dollars and semiconductors alone.
3 key takeaways from the article
- Six months ago Russia invaded Ukraine. On the battlefield a war of attrition is taking place along a thousand-kilometre front line of death and destruction. Beyond it another struggle is raging—an economic conflict of a ferocity and scope not seen since the 1940s, as Western countries try to cripple Russia’s $1.8trn economy with a novel arsenal of sanctions.
- The effectiveness of this embargo is key to the outcome of the Ukraine war. But it also reveals a great deal about liberal democracies’ capacity to project power globally into the late 2020s and beyond, including against China.
- Worryingly, so far the sanctions war is not going as well as expected.
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Topics: Global Economy, War, Russia, NATO, Sanctions
China’s heat wave is creating havoc for electric vehicle drivers
By Zeyi Yang | MIT Technology Review | August 26, 2022
As a globally unprecedented 70-day heat wave continues to hold its grip on southern China, with the highest temperature as much as 113°F (45°C), severe droughts and shortages in the hydropower supply are wreaking havoc on the lives of residents. Electric vehicle owners are one group, particularly feeling the heat. Since public charging posts are temporarily closed or restricted and many owners don’t have a private charging post, they’ve suddenly found themselves facing serious difficulties in powering their daily commutes.
The adoption of EVs (or new energy vehicles, as they are referred to in China) is often seen as a high point in China’s fight against climate change. But extreme weather, which increasingly disrupts power grids around the world, also serves as a reminder of the weaknesses in the charging infrastructure that keeps EVs running.
The record-breaking heat wave in China, which started back in June, has evaporated over half the hydroelectricity generation capacity in Sichuan, a southwestern province that usually gets 81% of its electricity from hydropower plants. That decreased energy supply, at a time when the need for cooling has increased demand, is putting industrial production and everyday life in the region on pause.
And as the power supply has become unreliable, the government has instituted EV charging restrictions in order to prioritize more critical daily electricity needs. As Chinese publications have reported, finding a working charging station in Sichuan and the neighboring region Chongqing—a task that took a few minutes before the heat wave—took as long as two hours this week. The majority of public charging stations, including those operated by leading EV brands like Tesla and China’s NIO and XPeng, are closed in the region because of government restrictions on commercial electricity usage. The charging challenges are also pushing some people back into using fossil fuel.
The sudden difficulty of charging in Sichuan and neighboring provinces has caught the EV industry by surprise. “A large-scale power shortage like this is still something we’ve never seen [in China],” says Lei Xing, an auto industry analyst and the former chief editor at China Auto Review. He says the climate disaster is reminding the industry that while China leads the world on many EV adoption metrics, there are still infrastructure weaknesses that need to be addressed.
3 key takeaways from the article
- As a globally unprecedented 70-day heat wave continues to hold its grip on southern China, with the highest temperature as much as 113°F (45°C), severe droughts and shortages in the hydropower supply are wreaking havoc on the lives of residents. Electric vehicle owners are one group, particularly feeling the heat.
- Since public charging posts are temporarily closed or restricted to give preference to industrial needs of energy and many owners don’t have a private charging post, they’ve suddenly found themselves facing serious difficulties in powering their daily commutes.
- The climate disaster is reminding the industry that while China leads the world on many EV adoption metrics, there are still infrastructure weaknesses that need to be addressed.
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Topics: Electric Vehicles, China, Environment
Strategy & Business Model Section
The ten rules of growth
By Chris Bradley et al., | McKinsey & Company | August 12, 2022
One of the surest signs of a thriving enterprise is robust and consistent revenue growth. That has not been easy to accomplish over the past 15 years. Corporate growth slowed dramatically after the global financial crisis, with the world’s largest companies growing at half the rate they did before 2008. Furthermore, increases in capital investments outstripped revenue expansion, compressing returns. Now, with a slowing global economy, rising inflation, and geopolitical uncertainty, growth that delivers profits and shareholder value may become more elusive still.
To buck these trends, business leaders need to follow a holistic growth blueprint consisting of three core elements: a bold aspiration and accompanying mindset, the right enablers embedded in the organization, and clear pathways in the form of a coherent set of growth initiatives.
To understand how organizations can try to overcome these obstacles, we studied the growth patterns of the sample companies through various lenses. Our findings suggest ten imperatives that should guide organizations seeking to outgrow and outearn their peers.
- Put competitive advantage first. Start with a winning, scalable formula.
- Make the trend your friend. Prioritize profitable, fast-growing markets.
- Don’t be a laggard. It’s not enough to go with the flow—you need to outgrow your peers.
- Turbocharge your core. Focus on growth in your core industry—you can’t win without it.
- Look beyond the core. Nurture growth in adjacent business areas.
- Grow where you know. Focus on growing where you have an ownership advantage.
- Be a local hero. Commit to winning on the home front.
- Go global if you can beat local. Expand internationally if you have a transferable advantage.
- Acquire programmatically. Combine healthy organic growth with serial acquisitions.
- It’s OK to shrink to grow. Ruthlessly prune your portfolio if you need to.
The authors have quantified what it takes to master each rule, as well as the extent to which excelling at each improves corporate performance. The resulting “growth code” allows you to benchmark your growth performance and set the bar for your next strategy. The more rules you master, the higher your reward. But the bar is high—fewer than half of the companies in the research excelled at more than three of the ten rules, and only 8 percent mastered more than five.
2 key takeaways from the article
- With a slowing global economy, rising inflation, and geopolitical uncertainty, growth that delivers profits and shareholder value may become more elusive.
- To understand how organizations can try to overcome these obstacles a study suggest ten imperatives that should guide organizations seeking to outgrow and outearn their peers. A few of these are: put competitive advantage first; start with a winning, scalable formula; make the trend your friend; prioritize profitable, fast-growing markets, don’t be a laggard; it’s not enough to go with the flow—you need to outgrow your peers, turbocharge your core; focus on growth in your core industry but look beyond the core; nurture growth in adjacent business areas; expand internationally if you have a transferable advantage; combine healthy organic growth with serial acquisitions; and ruthlessly prune your portfolio if you need to.
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Topics: Strategy, Business Model, Growth
Strategy-Making in Turbulent Times
By Michael Mankins and Mark Gottfredson | Harvard Business Review Magazine | September–October 2022 Issue
In crafting strategy, companies often struggle to cope with volatility. The traditional strategic-planning model worked well when markets were more stable and the primary factors influencing future growth and profitability were easier to forecast.
The world is now changing so quickly that no business can plan for every eventuality. Scholars and practitioners have spent years crafting tools and frameworks for strategy development under uncertainty—including, most notably, scenario planning, Monte Carlo simulation, and real options analysis. Each of those represented a significant advance. But none of those techniques has caught on widely. The authors believe that business leaders need to reconsider what good strategy looks like in turbulent times—and to think of strategy-making as a continuous process that generates a living, dynamic plan. Five steps of this new approach and how each leverages the tool kit for strategy-making under uncertainty are:
- Define Extreme but Plausible Scenarios. Breakthrough insights come from examining what we call extreme but plausible scenarios. The goal of this analysis is not to understand which outcome is most probable but to uncover new and different ways to compete and win, given a plethora of possible outcomes, and to reveal “no regret” moves that should prove worthwhile under most scenarios.
- Identify Strategic Hedges and Options. In an uncertain world, flexibility has tremendous value. Leaders can incorporate the value of flexibility—in the form of hedges and options—into their strategic decision-making.
- Run Experiments Before Locking in Investment. Small experiments are perfectly fine (in fact, encouraged), but each experiment should be tied to something very big to ensure that the test is worth running. Correctly applied, experiments prove the viability of big bets.
- Identify Trigger Points, Signposts, and Metrics. Even in markets where first-mover advantages are far less, knowing when to move is important. Accordingly, leading companies identify trigger points, signposts, and metrics to help them spot changes before the competition does and capitalize on the flexibility embedded in their strategies.
- Provide Prescriptive Surveillance. To become more adaptable to changing conditions, leaders must approach performance monitoring with a new mindset. The central question cannot be “How did we perform?” Instead it must be “Should we alter course?” Answering that question requires more and different information than does the standard weather report. Leaders must understand the root causes of any performance shortfall. And they must have prepared contingency plans that can be put into motion speedily to address any significant changes in market or competitive conditions.
3 key takeaways from the article
- In crafting strategy, companies often struggle to cope with volatility.
- The traditional strategic-planning model worked well when markets were more stable and the primary factors influencing future growth and profitability were easier to forecast. The world is now changing so quickly that no business can plan for every eventuality. Business leaders need to reconsider what good strategy looks like in turbulent times—and to think of strategy-making as a continuous process that generates a living, dynamic plan.
- Five steps of this new approach and how each leverages the tool kit for strategy-making under uncertainty are: Define Extreme but Plausible Scenarios, Identify Strategic Hedges and Options, Run Experiments Before Locking in Investment, Identify Trigger Points, Signposts, and Metrics, and Provide Prescriptive Surveillance.
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Topics: Strategy, Uncertainty, Business Performance
Leading & Managing Section
Saving Management From Our Obsession With Leadership
By Jim Detert et. al., | MIT Sloan Management Review | August 24, 2022
For decades, business thinkers and the executives who look to them for insight have elevated the visionary, inspirational leader over the useful yet pedestrian good manager. But evidence all around us suggests that we devalue management practices at our peril: What we’ve come to denigrate as mere management (done by those who are merely managers) is incredibly difficult and valuable. It becomes all the more vital during times of disruption and crisis. What good managers do?
Good Managers Design Good Jobs. Careful work design is often associated with organizational efficiency. It certainly has that benefit, but there’s also a psychological upside: Managers can meet employees’ needs for self-determination — that is, for belonging, autonomy, and a sense of competence — by crafting jobs that engage people without burning them out. Missions and visions alone don’t serve these functions They define roles and tasks, and provide resources to do them. These “structuring” activities, largely ignored in recent decades despite reams of research showing their importance, provide stability, which allows employees to feel competent and in control. They design for motivation.
Good Managers Hold People to High Standards. For decades, we’ve been telling managers to be “considerate,” “warm,” and “relational.” The evidence is clear: Treating employees nicely helps meet their need for belonging. They tell the whole truth about development and performance of their subordinates. Failure to provide that might be a byproduct of trying to build close relationships with employees, but it actually undermines trust. They confront bad behavior. Good managers also call out bad behavior. They don’t wave it away by pointing to the employee’s supposed intentions. Good Managers Focus on Fairness. And they address injustices.
Despite the massive attention given to the inspirational aspects of leadership, the evidence is clear that most people in the workplace still aren’t inspired, engaged, or truly committed. Many are heading for the exits. Good management can help solve these problems. It isn’t less valuable than good leadership — if such a distinction should even be made — nor is it any easier. It requires guts, grit, and a lot of practice. And it’s crucial to how people feel about their organization, how they perform, and whether they stay. Let’s stop pretending that it’s a lesser skill set — and get serious about building it.
3 key takeaways from the article
- For decades, business thinkers and the executives who look to them for insight have elevated the visionary, inspirational leader over the useful yet pedestrian good manager.
- Evidence all around us suggests that we devalue management practices at our peril: What we’ve come to denigrate as mere management (done by those who are merely managers) is incredibly difficult and valuable. It becomes all the more vital during times of disruption and crisis.
- What good managers do? They Good Managers Design Good Jobs that provide stability, which allows employees to feel competent and in control contributing to organizational efficiency. Good Managers Hold People to High Standards. The treat employees nicely which helps meet their need for belonging. They tell the whole truth about development and performance of their subordinates. They confront bad behavior. The focus on fairness. And they address injustices.
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Topics: Leadership, Management, Organizational Performance
Five Rules For Successful Business Decision-Making
By Pascal Bornet | Forbes Magazine | Aug 31, 2022
Companies succeed or fail based on the effectiveness of their decision-making. How can you ensure your decisions are objective, consistent and based on complete information? How can you avoid costly mistakes due to information overload, lack of time or bias? Five rules about how to make effective decisions are:
- Be aware of your own bias. We are all subject to biases that affect our decision-making. There are 188 known cognitive biases. For example, we humans can spot imaginary patterns in random data (pareidolia) and make predictions based on them (the gambler’s fallacy). Such biases are part of human nature, and you can never suppress them entirely. But they are often useful. The problem is that they’re only correct most of the time. If you’re using unexamined cognitive shortcuts to manage a budget of millions of dollars, the times when the shortcuts fail can be catastrophic.
- Don’t confuse good decisions with good outcomes. Luck impacts the outcome of all decisions. Therefore, the way we make decisions is the only input that we have control over. It is by carefully rethinking the way we make decisions that we can reliably and sustainably improve their impact. Today, in most enterprises, decisions are made differently by different people. Even experts in the same field will not have the same way of making the same decisions; hence the necessity to document decisions (decision maps), optimize the way decisions are made and standardize these maps. Only when this is done can we digitize and automate decisions—and by digitalizing the decisions, we ensure consistency in the way decisions are made.
- Set clear goals and implement appropriate governance. Motivations and goals are necessary for decision-making. No goals, no decisions. Authority to make decisions should be given to the people closest to the point of impact of those decisions, increasing reactivity and learning.
- Measure, monitor and learn from decision-making to improve it. The most reliable way to record and measure decisions is to digitize them. It’s important to have objective records of decisions rather than just people’s memories, especially as memory is an area that’s particularly vulnerable to cognitive biases. Once you have objective, digitized records of decisions made, you can measure the variance between the expected and actual impact of decisions, and you can track them over time using analytics.
- Leverage decision intelligence technology. Leverage technology to support the previous four rules! In a world where an increasing amount of business processes are supported by technology, the same should be true for decisions.
3 key takeaways from the article
- Effective decision-making is more important than ever before. Sixty-five percent of executives have to make more complex decisions today than they did two years ago and 50% of them experience higher pressure to justify the decisions they make.
- Companies succeed or fail based on the effectiveness of their decision-making. How can you ensure your decisions are objective, consistent and based on complete information? How can you avoid costly mistakes due to information overload, lack of time or bias?
- Five rules about how to make effective decisions are: be aware of your own bias, don’t confuse good decisions with good outcomes, set clear goals and implement appropriate governance, measure, monitor and learn from decision-making to improve it, and leverage decision intelligence technology.
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Topics: Decision-making, Biases, Uncertainty
Entrepreneurship Section
4 Crucial Mistakes to Avoid as Your Small Business GrowsDon’t hold yourself back during times of growth.
By Jerry Jao | Inc Magazine | August 12, 2022
As an entrepreneur or small-business owner, you’re probably used to a razor-thin margin for error. Without the deep pockets and seemingly endless resources that more established companies have, we must plan ahead, readily adapt, and be deliberate in the decisions we make. Four must-avoid mistakes entrepreneurs often make when trying to grow their businesses are:
- Don’t let your customer relationships suffer. People love small businesses because of their personal touch. So if you’re a small-business owner who’s looking to scale your operations or offerings, be sure to keep meaningful customer interactions a top priority, regardless of where or how you deliver your customer service.
- Don’t spread yourself too thin. Gathering data on your customers has never been easier. The challenging part is acting on it. Research from Constant Contact shows one in five small businesses don’t use automation, A.I., or machine learning of any kind. Don’t let your business remain in the minority, stuck in a bygone era. Consider the tools and programs available to you to help unpack consumer data and inform business decisions, and ultimately save you time in trying to make these decisions all on your own.
- Don’t try to grow your business without a plan. “Expect the unexpected” – as a small-business owner. Preparing your small business for bumps in its journey will leave it stronger in the long run, even if it can feel like you’re sacrificing profit. A strong business plan will strike a balance between prioritizing innovation and growth while moving forward at a healthy, sustainable pace. Regardless of how much a small-business owner may find themselves ready to expand operations or IPO and sell the company within a month of profits in the green, successfully scaling a business cannot be artificially sped up. Growth is a process and must be taken day by day. The best types of business plans are those that are constantly revisited and reevaluated: businesses’ needs can change overnight.
- Don’t forget to invest in your employees. The more your business grows, the greater the pressure is on your team. So always underscore the importance of communicating frequently and honestly with your employees. Treat them as your teammates, and consider how their mental and physical well-being contributes to the success of your company. Investing in your employees can take many forms: proper training, team-building, and paying a competitive salary.
3 key takeaways from the article
- As an entrepreneur or small-business owner, you’re probably used to a razor-thin margin for error. Without the deep pockets and seemingly endless resources that more established companies have, we must plan ahead, readily adapt, and be deliberate in the decisions we make. Because not doing so can result in costly mistakes that hinder the growth we’re after.
- In reality, the act of maintaining a small-business mindset ultimately helps businesses meet their full potential and grow beyond all expectations while staying true to their origins and purpose.
- Four must-avoid mistakes entrepreneurs often make when trying to grow their businesses are: don’t let your customer relationships suffer, don’t spread yourself too thin, don’t try to grow your business without a plan, and don’t forget to invest in your employees.
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Topics: Entrepreneurship, Startups, Small Business
How to Successfully Run Multiple Businesses
By Chris Kille | Entrepreneur Magazine | August 28, 2022
Running several profitable companies, at the same time, is a lot more doable than you’d think. For starters, make a “to-do” list, which will differ for every business. The key is to make sure everything is placed in its order of importance. You’ll likely find that some items can be delegated to others (like contractors or employees), while others require your attention. When you have time, check off completed tasks to know what’s been accomplished. 5 pieces of advice for successfully running multiple businesses are:
- Expedite an expert. If you’re not good at something, pay someone to do it. In addition to outsourcing tasks that take away from building your business, there are other ways to maximize your time. Virtual assistant e.g., can manage social media accounts and emails, so you don’t have to worry about that stuff while you are working on other tasks.
- Breathing room for brainstorming. When juggling multiple businesses, it’s easy to get bogged down with the day-to-day tasks of running each business. In the process, you might lose sight of what made those achievements successful in the first place. To avoid this trap, give yourself some weekly spots to check in with your vision for each investment. What do you want to accomplish? What are your goals? What are the most important things that need to get done? Don’t be afraid to adjust if your game-plan has shifted.
- Data-mining for decision-making. Data is the best way to determine what is working and what isn’t. It will help you see which products are selling well and which aren’t and the clients that need more attention. If you’re running multiple businesses, customer relationship management is essential. A CRM system can help you track everything from sales leads to customer service issues and marketing campaigns, so you don’t have to rely on guess work when making business decisions.
- Pull the perfect people. Hire good employees for each business, so you don’t have to do everything yourself. That may mean hiring full-time team members, but there are other options. For instance, you can recruit freelancers or outsource to virtual assistants. The key is finding someone who can handle your business while you’re busy working on another one.
- The right tools and techniques. When managing multiple ventures, your first priority is ensuring that your time is spent on what matters and that you are spending the majority of it growing your businesses. Although there is a thriving community of professionals working on multiple businesses, it’s a unique path and something that can require some deliberate planning.
3 key takeaways from the article
- Running several profitable companies, at the same time, is a lot more doable than you’d think. For starters, make a “to-do” list, which will differ for every business. The key is to make sure everything is placed in its order of importance.
- You’ll likely find that some items can be delegated to others (like contractors or employees), while others require your attention. When you have time, check off completed tasks to know what’s been accomplished.
- 5 pieces of advice for successfully running multiple businesses are: outsource for the expertise you don’t have, keep a breathing room for brainstorming, use data-mining for decision-making, pull the perfect people, and use the right tools and techniques.
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Topics: Entrepreneurship, Growth, Decision-making