Extractive summaries of and key takeaways from the articles curated from TOP TEN BUSINESS MAGAZINES to promote informed business decision-making | Week 262|September 16-22, 2022
Download this week’s edition in PDF
Download this week’s edition in Audio
Shaping Section : Ideas and forces shaping economies and industries
China’s property crisis hasn’t gone away: it is getting worse
The Economist | September 15, 2022
An already big problem is becoming even more alarming. More than two-thirds of urban households’ wealth is tied up in property and the industry underpins a fifth of GDP. The housing market is slumping into a deepening hole, dragging the economy down and even causing small outbreaks of social unrest.
The frenetic pace of house building used to be emblematic of China’s rise. Now confidence in the model has collapsed. Buyers are dropping out, borrowers are on mortgage strikes and developers face a liquidity squeeze. In July the value of new home sales fell by 29% compared with a year earlier.
Two years ago, in an attempt to tame the property monster, the government imposed limits on borrowing by developers, known as the “three red lines”. The reforms carried the imprimatur of Mr Xi, who insisted that “Housing is for living in, not for speculation.” The original idea was that tougher rules would lead property firms to be more restrained and deter speculative buyers, allowing house building to slow to a sensible pace.
Things started to go wrong last year with the default of Evergrande, a giant developer. A year later Mr Xi’s strategy lies in tatters as activity has faltered. The crisis is now a political, as well as economic, problem. In parts of the country, distress is turning into defiance. Mortgage-holders have banded together, threatening to stop repaying their loans if work does not resume on long-overdue homes.
Part of the problem is Mr Xi’s fixation with zero covid. In trying to suppress outbreaks with lockdowns—Chengdu, with a population of 21m, is the latest mega-city to be put through the wringer—the state has stomped on confidence. Another part is that the government’s original plan did not resolve the conflicts between growth and financial prudence, and between citizens’ needs and the incentives of crony officials and developers.
China’s property market needs to be redesigned. Local governments need other sources of revenue to lessen their dependence on selling land. The receipt of money in advance for unbuilt properties must be better policed, to prevent fraud and collapses. As the population peaks and migration to the cities slows, the property industry needs to shrink. Attention should turn to getting the most out of China’s existing housing stock.
3 key takeaways from the article
- The housing market in China is slumping into a deepening hole, dragging the economy down and even causing small outbreaks of social unrest.
- Part of the problem is Mr Xi’s fixation with zero covid. In trying to suppress outbreaks with lockdowns—Chengdu, with a population of 21m, is the latest mega-city to be put through the wringer—the state has stomped on confidence. Another part is that the government’s original plan did not resolve the conflicts between growth and financial prudence, and between citizens’ needs and the incentives of crony officials and developers.
- China’s property market needs to be redesigned. As the population peaks and migration to the cities slows, the property industry needs to shrink. Attention should turn to getting the most out of China’s existing housing stock.
Listen to the Extractive Summary of the Article
(Copyright)
Topics: China, Property Market, Recession
It’s White-Collar Jobs That Are at Risk in the Next Recession
By Katia Dmitrieva and Reade Pickert | Bloomsberg Businessweek | September 13, 2022
Ever since the mass layoffs early in the pandemic, US businesses have been adding workers at a rapid clip. Now they’re slowing down, pulling job listings, and scaling back hiring plans as the Federal Reserve aggressively raises interest rates to fight inflation.
That’s darkening the outlook across the economy—but it’s especially problematic for white-collar industries including business services, tech, banking, and real estate, where staffing numbers are far above pre-Covid levels. Layoffs have already begun, with Netflix, real estate broker Re/Max Holdings, and social media platform Snap all announcing staff reductions.
That outcome would be the polar opposite of what occurred during the pandemic slump, when it was lower-wage workers—especially in service industries such as retail, restaurants, and hotels—who bore the brunt of layoffs. It’s a prospect more reminiscent of the recession in the early 1990s, when white-collar workers were at greater risk of ending up on the unemployment line than in the past.
Of course, the US may escape a downturn altogether. While one government measure of activity showed the economy shrank in the first half of 2022, another pointed to continued growth. Employers added 315,000 jobs in August, and openings have rebounded to near record highs, not what one would expect from an economy that’s running out of steam. But about two-thirds of employers see a recession coming, according to a survey by Principal Financial Group.
The rate of people quitting jobs, typically a sign of confidence they can find another one, has hit its lowest level in more than a year. The growth of new postings has slowed over the past six months, most markedly for remote work that’s more likely to be white collar, according to the job listings website Indeed. More broadly, companies are lowering their projected staff costs for next year, eliminating job postings in areas such as accounting and customer support, and aiming to hire fewer people or space out hiring over a longer time. Many white-collar employers went well beyond filling staffing gaps that resulted from Covid-19.
3 key takeaways from the article
- Ever since the mass layoffs early in the pandemic, US businesses have been adding workers at a rapid clip. Now they’re slowing down, pulling job listings, and scaling back hiring plans as the Federal Reserve aggressively raises interest rates to fight inflation.
- That’s darkening the outlook across the economy—but it’s especially problematic for white-collar industries including business services, tech, banking, and real estate, where staffing numbers are far above pre-Covid levels. Layoffs have already begun.
- Companies are lowering their projected staff costs for next year, eliminating job postings in areas such as accounting and customer support, and aiming to hire fewer people or space out hiring over a longer time. Many white-collar employers went well beyond filling staffing gaps that resulted from Covid-19.
Listen to the Extractive Summary of the Article
(Copyright)
Topics: USA, Economy, Employment, Recession, Layoffs
How Asian business leaders can prepare for a volatile future
By Gautam Kumra | McKinsey & Company | September 16, 2022
The economic outlook has been more buoyant in much of Asia than in North America or Europe this year. Even so, the post-Covid rebound is flattening as inflation rises in many countries, and consumer and investor confidence falls. In conversations with executives from all over Asia, there is a common theme: They are uncertain about the future and worried about economic and geopolitical volatility. Of course, they have been living with uncertainty for years. Indeed, one of the many lessons of Covid-19 is the power of resilience: companies that were resilient survived and even prospered. Those that weren’t found themselves weaker. Five things Asian companies can do to become more resilient and build long-term growth:
- Look in the mirror. What sets resilient companies apart is that even in the face of uncertainty, they don’t dither. They act. They are able to act because they are ready to. And that starts with self-knowledge—that is, identifying the critical risks and disruptions facing them, both now and in the next few years.
- Clean up balance sheets. Before the 2008 financial crisis, resilient companies had already cleaned up their balance sheets, cutting their operating costs and reducing their debt by an average of $1.20 for every $1 of book capital. In contrast, their less resilient peers added more than $3 of debt. This made a difference: resilient companies were in a much stronger position when conditions deteriorated.
- Develop an inflation management playbook. The last time global inflation was this high was in the early 1980s, so even many seasoned leaders haven’t been through this kind of environment. Every business would do well to develop an inflation strategy. That could involve rethinking products and service delivery to increase efficiency; mobilizing procurement to solve supply constraints and suggest ways to cut costs and, of course, pricing strategy.
- Promote operational flexibility. When Covid-19 hit, the most resilient companies established small and empowered cross-functional teams. They also invested more in collaboration technologies, team building, and leadership training. Companies did this out of necessity, and now they are doubling down on these practices for one simple reason: they worked.
- Reimagine the recruitment and cultivation of talent. Companies need to look at their employee value proposition and ensure that what they are offering matches what candidates want. Money and advancement are important, but not enough. McKinsey research has found that employees increasingly value factors like growth, engagement and well-being.
3 key takeaways from the article
- In conversations with executives from all over Asia, there is a common theme: They are uncertain about the future and worried about economic and geopolitical volatility.
- Of course, they have been living with uncertainty for years. Indeed, one of the many lessons of Covid-19 is the power of resilience: companies that were resilient survived and even prospered. Those that weren’t found themselves weaker. Resilience matters in times good, bad and indifferent—but it really shows up during times of crisis.
- Five things Asian companies can do to become more resilient and build long-term growth: look in the mirror, clean up balance sheets, develop an inflation management playbook, promote operational flexibility, and reimagine the recruitment and cultivation of talent.
Listen to the Extractive Summary of the Article
(Copyright)
Topics: Leadership, Recession, Asia, Business
A Dutch-Norwegian startup wants to open ‘a whole new frontier’ of renewable energy with solar farms that float on the ocean’s surface
By Ian Mount | Fortune Magazine | September 20, 2022
Dutch aerospace engineer Olaf de Swart wanted to work in renewable energy after graduating from the Delft University of Technology in 2009 with a specialty in flexible solar modules. An opportunity he found after 5 years when his scientific passion in energy pushed him to ask the question “Why can’t we put solar panels on the sea?”
De Swart received a small budget from Damen, his employer, in 2017 to investigate his idea, but when he applied for it to be as part of Damen’s innovation program—code-named “Morpheus”—in 2018, the shipbuilder passed on developing offshore solar panels in-house since the concept was outside its core business and could compete with its energy industry clients. Damen’s decision motivated de Swart and several Damen colleagues to launch their own offshore floating solar energy park business called SolarDuck.
Today, the startup is partnering with German energy firm RWE to build a pilot floating photovoltaic (FPV) plant that will open in the Belgian North Sea next year. The plant will be one of the first truly high-wave offshore plants and the first to use a unique triangular design that should help it weather heavy seas—one of the great obstacles to offshore solar installations.
The 0.5 Megawatt peak (or MWp, a measure of the maximum potential power output) pilot project will mark a major step in proving that offshore solar farms can provide reliable and cheap energy for land-scarce countries in Asia, Europe, and the Caribbean.
Floating solar panels offer three main advantages, says Signes from Rystad. First, the solar panels are more efficient because the water below keeps them cool. Second, it is easier to get permits for already “artificialized” areas, like spent quarries’ hydroelectric dams, in part because there are few NIMBY (Not In My Back Yard) objections from local residents. And third, mixing floating solar plants with existing wind and hydroelectric plants achieves economies of scale in terms of infrastructure costs.
Globally, floating solar’s installed capacity is expected to hit 24 gigawatts (GW) by 2030, growing from 2.7 GW at the end of the first half of 2022, mainly led by Asia. Its potential is far greater: the U.S. Department of Energy’s National Renewable Energy Laboratory (NREL) estimates that adding floating solar power to existing hydropower reservoirs could supply almost half of current global electricity demand.
3 key takeaways from the article
- Dutch aerospace engineer Olaf de Swart wanted to work in renewable energy – an opportunity he found after 5 years when his scientific passion in energy pushed him to ask the question “Why can’t we put solar panels on the sea?”
- Today, Swart’s startup is partnering with German energy firm RWE to build a pilot floating photovoltaic (FPV) plant that will open in the Belgian North Sea next year. The plant will be one of the first truly high-wave offshore plants and the first to use a unique triangular design that should help it weather heavy seas—one of the great obstacles to offshore solar installations.
- The 0.5 Megawatt peak pilot project will mark a major step in proving that offshore solar farms can provide reliable and cheap energy for land-scarce countries in Asia, Europe, and the Caribbean.
Listen to the Extractive Summary of the Article
(Copyrights)
Topics: Energy, Solar Energy
Strategy & Business Model Section
Why Innovators in China Stay Close to the Market
By Neil C. Thompson et al., | MIT Sloan Management Review | September 13, 2022
In China, unlike its global products, Philips has products that arose from local innovations and are customized for Chinese consumers. It’s not surprising that a multinational company would be willing to adapt its offerings to serve a large market. What is surprising is that Philips doesn’t feel the need to do this market-specific innovation in many large countries but does so in China. What is so different about competing in the Chinese market that it demands an entirely different approach than is dominant elsewhere in the world? Over the past three years, the authors conducted two large representative surveys of corporate innovation. They found that in China, innovation is different.
The research shows that outside China, large companies are converging on a pattern for sourcing innovation. Internally, they are centralizing innovation. If they don’t have central R&D units, they are building them. And, increasingly, they are building centrally controlled innovation labs located in rich innovation ecosystems, such as Silicon Valley. Meanwhile, the appetite for seeking innovation from inside individual business units is decreasing, with ever fewer important innovations coming from these sources. Externally, companies are rapidly expanding their innovation portfolios to get access to expertise, particularly for digital technologies. More businesses are turning to crowdsourcing and working with universities, startups, and third-party experts. At the same time, some external sources, like customers and suppliers, are becoming less important.
The trends we identified in China are markedly different and reflect an orientation toward generating ideas closer to customers to drive more market-led innovation. Chinese companies are about twice as likely as those elsewhere in the world to use customers, competitors, or business unit operational employees as a source of innovation. They are also 27% more likely to use business unit staffers who are dedicated to innovation full time. research indicates that the choice of this approach to innovation is, in a way, itself market-driven. Even within China, companies do more market-led innovation when they produce for the internal market than when they export, on average using 46% more market-led innovation sources when they produce entirely for internal consumption than when they export all their production. So even among Chinese businesses, it is those that are trying to capture domestic customers that are focusing on market-led innovation.
Three ingredients from the Chinese recipe for corporate innovation stand out: involving customers in innovation, leveraging competitor innovation, and sourcing insights from employees in market-facing business units.
3 key takeaways from the article
- In China, unlike its global products, Philips has products that arose from local innovations and are customized for Chinese consumers.
- Everywhere else companies take a similar approach to corporate innovation defined in terms of central R&D in rich innovation ecosystems; less reliance on customers, competitors and employees; and increasingly look towards innovation hubs including universities. But the companies in China — be they domestic or foreign — have chosen a different path. They rely more on data from customers, competitors, or business unit operational employees as a source of innovation – an approach referred to as market-driven innovation.
- Three ingredients from the Chinese recipe for corporate innovation stand out: involving customers in innovation, leveraging competitor innovation, and sourcing insights from employees in market-facing business units.
Listen to the Extractive Summary of the Article
(Copyright)
Topics: China, Business Model, Research & Development, Global Economy
Leading & Managing Section
How to Navigate Conflict with a Coworker
By Amy Gallo | Harvard Business Review | September–October 2022
Interpersonal conflicts with insecure bosses, know-it-all colleagues, passive-aggressive peers—are common at work, and it’s easy to get caught up in them. Trapped in these negative dynamics, we find it hard to be our best selves or to improve the situation. Instead we spend time worrying, react in regrettable ways that violate our values, avoid difficult colleagues, and sometimes even withdraw from work entirely. But those responses can lead to a host of bad outcomes, including reduced creativity, slower and worse decision-making, and even fatal mistakes. Seven strategies that will help you work more effectively with difficult colleagues.
Remember That Your Perspective Is Just One Among Many. Once we’re confident about something we find it hard to imagine that others won’t see it the same way. It’s important to recognize and resist this gut reaction. Challenge your own perspective by asking questions such as: How do I know that what I believe is true? What if I’m wrong? How would I change my behavior? What assumptions have I made? How would someone with different values and experiences see things?
Be Aware of Your Biases. One common derailer of colleagues’ relationships is fundamental attribution error—an inclination to assume that other people’s behavior has more to do with their personality than with the situation, while believing the opposite of oneself.
Don’t Make It “Me Against Them”. In a disagreement it’s easy to think in polarizing ways: “me versus you,” enemies at war. To break out of that mental model, instead imagine that there are not two but three entities in the situation: you, your colleague, and the dynamic between you. Maybe that third entity is something specific: a decision you must make together or an assignment you need to complete. Rather than work to change your colleague, try to make progress on that third thing.
Know Your Goal. To avoid drama and stay focused on the work, you need to be clear about your goals.
Avoid Workplace Venting and Gossip—Mostly.
Experiment to Find What Works. There isn’t one right way to get a know-it-all to stop being condescending or your passive-aggressive colleague to deal with you in a more straightforward way. The strategies you choose will depend on the context: who you are, who the other person is, the nature of your relationship, the norms and culture of your workplace, and so on.
Be—and Stay—Curious. Salvador Minuchin, an Argentine therapist, wrote, “Certainty is the enemy of change.” When dealing with a negative coworker, it’s easy to think, It’s always going to be this way or That person will never change. But resignation and pessimism will get you nowhere. Instead, adopt a curious mindset and maintain hope that your troubled relationship can be improved.
2 key takeaways from the article
- Interpersonal conflicts with insecure bosses, know-it-all colleagues, passive-aggressive peers—are common at work, and it’s easy to get caught up in them. Trapped in these negative dynamics, we find it hard to be our best selves or to improve the situation.
- Seven strategies that will help you work more effectively with difficult colleagues: Remember That Your Perspective Is Just One Among Many, Be Aware of Your Biases, Don’t Make It “Me Against Them”, Know Your Goal, Avoid Workplace Venting and Gossip—Mostly, Experiment to Find What Works, and Be—and Stay—Curious.
Listen to the Extractive Summary of the Article
(Copyrights)
Topics: Conflict, Communication, Organizational Behavior
Why No One Can Kill Zombie Problems. Even When The Solutions Are Obvious.
By Steve Andriole | Forbes Magazine | September 21, 2022
Generalizations like these are off-putting. But as you look around your organization, can you honestly say you tackle problems decisively and effectively? Will you admit that the same problems have been hanging around your company for years, but you just don’t have the wherewithal to deal with them? Are the problems just too hard to solve? Are they beyond human capacity? Of course not. We just refuse to see – or do – the obvious.
Let’s look at an “easy” problem that consumes endless amounts of time, energy, and resources – but still goes unsolved. Let’s start with sales. Let’s assume quotas are missed – like a lot. How complicated is this problem? Is it intractable? Mysterious? New? Do your competitors – whose sales are climbing – have the same problems?
Let’s revisit the problem. Is this really that tough? According to the author he has lived in, and worked with, companies on this and other problems many times. He is often stunned at how obvious the solutions are but how reluctant companies are to follow the best practices honed after decades of failure (which, after all, is where best practices come from). Note that the entire consulting industry is based on the unwillingness of companies to solve their own problems – no matter how obvious they might be. It’s all about Zombie control.
Let’s start with the solution. Root cause analysis is an easy way to find out why sales are poor. Sectors can be assessed. Rising ones targeted, falling ones jettisoned. Product readiness can be assessed against the competition: good, bad, better, best, worst. Look in the mirror and invest in rising sectors against the weakest competitors with good/better/best products. Sales cycles across segments can be measured. Sales teams’ and salespersons’ performance can also be measured: remove laggards, reward high performers, recruit and train accordingly. Do machines have enough intelligence to kill sales Zombies? You bet, because the process can be objectively modeled. So what’s the problem? Let’s be honest with ourselves: nuance, interpretation, empowerment, delay, fear, friends, caution, and incompetence – are just a few of the Zombie problem features that prevent solutions from doing their work, which is where the real root cause analysis should focus. We know how to fix sales; we just refuse to do so. It’s because no one wants to lead the charge on the sales Zombie which is why this particular Zombie has more than a million lives.
3 key takeaways from the article
- As you look around your organization, can you honestly say you tackle problems decisively and effectively? Will you admit that the same problems have been hanging around your company for years, but you just don’t have the wherewithal to deal with them?
- So what’s the problem? Let’s be honest with ourselves: nuance, interpretation, empowerment, delay, fear, friends, caution, and incompetence – are just a few of the Zombie problem features that prevent solutions from doing their work.
- It is not that problems are too hard to solve or they are beyond human capacity? Most of these are not. We just refuse to see – or do – the obvious.
Listen to the Extractive Summary of the Article
(Copyright)
Topics: Strategy, Leadership, Performance Management
Entrepreneurship Section
6 Effective Ways to Show Your Company’s Value
By Martin Zwilling | Inc Magazine | September 21, 2022
Peers and managers don’t recognize the true value of your contributions. We expect that our results have self-evident value, without requiring any effort on our part. No. Each of you is responsible for documenting and communicating your value, without bragging or hyperbole. A few of the recommendations, as suggested in a new book, “Show the Value of What You Do,” by Patricia Pulliam Phillips and Jack J. Phillips, for the implementation of a personal value process based on your situation and style are:
- Clarify the impact you want from every project. Don’t say “yes” to too many requests, without consideration for potential value to the business or you. Focus on return for every task you accept. In understanding impact, it is important that you first understand the business mission and purpose. It’s hard to provide value in achieving any objective if you don’t know what the objective is.
- Pick the right solution to maximize the impact. You need to understand the “why” of any project before you work on the solution. The easiest or quickest approach may not provide the value you need to be recognized. Look at the problem from the perspective of your business leaders and customers, who need to support your value and theirs later. In all cases, you need to make sure you are solving the root cause problem, rather than just a symptom.
- Communicate the criteria for success early and often. It is important to set the expectations for success early, as well as the appropriate metrics. This will allow others to know what they have to do, as well as your contribution, to make it happen and recognize the impact.
- Demonstrate the evolution of success along the way. This can best be done by collecting and capturing application and reaction data along the way and keeping everyone informed of progress. Remember that learning has value, and pivots are often required. Without your communication, these can be seen as negative values by others.
- Provide evidence of ROI to maintain credibility. When providing data results, credibility is a key concern. Use real data on costs and return on investment (ROI) rather than opinions and hyperbole. It is always good practice to recognize all the contributors to a project, as well as external influences. Your value is the evidence as well as the analysis.
- Leverage the results for your maximum benefit. Your goal is always to make the outcome better. If the project is successful, make it more successful. If it is not, change things to make it produce more value the next time, or make the next project better. Use the results to gain support, commitment, influence, and funding for related efforts.
2 key takeaways from the article
- Peers and managers don’t recognize the true value of your contributions? We expect that our results have self-evident value, without requiring any effort on our part. No. Each of you is responsible for documenting and communicating your value, without bragging or hyperbole.
- A few of the recommendations for the implementation of a personal value process based on your situation and style are: clarify the impact you want from every project, pick the right solution to maximize the impact, communicate the criteria for success early and often, demonstrate the evolution of success along the way, provide evidence of ROI to maintain credibility, and leverage the results for your maximum benefit.
Listen to the Extractive Summary of the Article
(Copyright)
Topics: Marketing, Personal Branding
5 Ways to Adapt to Change and Build a More Resilient Business Model
By James Khuri | Entrepreneur Magazine | September 22, 2022
In an age of rapid change and rising uncertainty, it is more important than ever that your business is built on a model that is adaptable and resilient. Change is inevitable. More than ever, it’s essential to prepare yourself and your team for the unexpected by crafting a business plan that is dynamic and innovative. Here are some tips you can implement into your business so you can be prepared for the unexpected.
- Identify the recent changes in your industry. To excel in business, it is important not only to understand the market but also to have an understanding of the industry’s business environment. The first influential factors you want to identify are uncontrollable elements, such as social, economic and political changes. How is the present state of the world impacting your current business model, and what new ideas can you implement to keep on top of these changes? Another factor to watch out for is socio-economic changes, which will alter the behavior of your customers. Gain a competitive advantage through new technologies and technological flexibility to keep up with these fast-paced changes.
- Pay attention to how your audience uses social media. Always keep an eye on trending practices and norms making an impact on society. Look at how your consumer base interacts online. Is this Tiktok or Facebook. While younger people use Instagram and TikTok to share personal content such as selfies and short vlogs, older audiences will use social media to share articles, photos and videos relating to their interests. With this in mind, you can cultivate an online presence with news stories that will attract like-minded people to your business.
- Recruit employees with a knack for innovation. In order to not only stay alive during uncertain times but also to gain a competitive edge in the market, hiring employees who are forward-thinking, progressive and share the values and vision for your brand is essential.
- Build a team of consultants. An outside expert can often provide the insight and objective perspective needed to assess your market standing and identify problems and areas of improvement. They can also guide your team on how to make changes when the ground begins to shift, particularly when it comes to adjusting your advertising techniques or revitalizing your brand. This group of advisors could also be a close group of friends, peers and partners if you want to keep it informal.
- Listen to your customers. Although you may think you know your company best, the people who are interacting and consuming your product or service should be the actual experts. Paying customers should always be what drives meaningful change across your business. Do not be afraid to ask customers what they are looking for in your service and what they anticipate in terms of future needs.
2 key takeaways from the article
- In an age of rapid change and rising uncertainty, it is more important than ever that your business is built on a model that is adaptable and resilient.
- Five tips you can implement into your business so you can be prepared for the unexpected are: identify the recent changes in your industry, pay attention to how your audience uses social media, recruit employees with a knack for innovation, build a team of consultants, and listen to your customers.
Listen to the Extractive Summary of the Article
(Copyright)
Topics: Business, Resilience, Uncertainty
Leave a Reply
You must be logged in to post a comment.