Weekly Business Insights from Top Ten Business Magazines – Week 275

Extractive summaries of and key takeaways from the articles curated from TOP TEN BUSINESS MAGAZINES to promote informed business decision-making | Week 275 | December 16-22, 2022

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Shaping Section : Ideas and forces shaping economies and industries

Why are the rich world’s politicians giving up on economic growth?

The Economist | December 14, 2022

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The prospect of recession may loom over the global economy today, but the rich world’s difficulties over growth are graver still. The long-run rate of growth has dwindled alarmingly, contributing to problems including stagnant living standards and fulminating populists. Between 1980 and 2000, GDP per person grew at an annual rate of 2.25% on average. Since then the pace of growth has sunk to about 1.1%.

Although much of the slowdown reflects immutable forces such as ageing, some of it can be reversed. The problem is that, as the Economist writes this week, reviving growth has slid perilously down politicians’ to-do lists. Their election manifestos are less focused on growth than before, and their appetite for reform has vanished.

The other reasons include, for instance, the skills of the labour force have stopped improving as fast. Ever more workers are retiring, women’s labour-force participation has flattened off and little more is to be gained by expanding basic education. As consumers have become richer, they have spent more of their income on services, for which productivity gains are harder to come by. Sectors like transport, education and construction look much as they did two decades ago. Others, such as university education, housing and health care, are lumbered with red tape and rent-seeking.

Ageing has not just hurt growth directly, it has also made electorates less bothered about GDP. Growth most benefits workers with a career ahead of them, not pensioners on fixed incomes. The Economist analysis of political manifestos shows that the anti-growth sentiment they contain has surged by about 60% since the 1980s. Welfare states have become focused on providing the elderly with pensions and health care rather than investing in growth-boosting infrastructure or the development of young children. Support for growth-enhancing reforms has withered.

Moreover, even when politicians say they want growth, they act as if they don’t. Today’s leaders are the most statist in many decades, and seem to believe that industrial policy, protectionism and bail-outs are the route to economic success. That is partly because of a misguided belief that liberal capitalism or free trade is to blame for the growth slowdown. Sometimes this belief is exacerbated by the fallacy that growth cannot be green.

n fact, demographic decline means that liberal, growth-boosting reforms are more vital than ever. These will not restore the heady rates of the late 20th century. But embracing free trade, loosening building rules, reforming immigration regimes and making tax systems friendly to business investment may add half a percentage point or so to annual per-person growth. 

3 key takeaways from the article

1. The prospect of recession may loom over the global economy today, but the rich world’s difficulties over growth are graver still. Between 1980 and 2000, GDP per person grew at an annual rate of 2.25% on average. Since then the pace of growth has sunk to about 1.1%.
2. Although much of the slowdown reflects immutable forces such as ageing, some of it can be reversed. The problem is that reviving growth has slid perilously down politicians’ to-do lists. Their election manifestos are less focused on growth than before, and their appetite for reform has vanished.
3. But embracing free trade, loosening building rules, reforming immigration regimes and making tax systems friendly to business investment may add half a percentage point or so to annual per-person growth.

Full Article

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Topics:  Global Economy, First World, Economic Growth

China’s iPhone Factory Stumbles Give India a Chance to Swoop In

By Joshua Brustein and Sankalp Phartiyal | Bloomberg Businessweek | December 16, 2022

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A factory riot broke out in late November in Zhengzhou, China, home to the world’s largest iPhone production facility. Exhausted from being locked in unsanitary dormitories with inadequate food and furious over the prospect of not receiving the wages they’d been promised, workers clashed violently with security forces. The following week protests swept across the nation.

The unrest came after a half-decade of rising hostilities between the US and China, making the status quo for manufacturing in China seem less sustainable than ever. The Covid-19 pandemic has also highlighted the dangers of concentrating such a large proportion of global production in any one country. Taken together, these factors have begun to make the risks of major disruption in China look as scary as well-understood inefficiencies elsewhere. 

Bloomberg News has reported that the situation in Zhengzhou is likely to result in 6 million fewer iPhone Pro units this year, and Morgan Stanley has said the goal is to move 10% of iPhone production to India within two to three years.

Even if these forecasts bear out, China’s status as the world’s factory would remain intact. Nor does concern about China necessarily translate to enthusiasm for India. The country’s decade-plus effort to lure manufacturers has often resulted in frustration. India can offer low-cost labor and access to an enormous domestic market but has a reputation for creaky infrastructure, under-developed small local suppliers and gnarled bureaucracy. There are also other countries trying to capitalize on fears of multinational corporations about their overreliance on China. As it stands, India isn’t the best place to make phones if cost considerations are the only factor.  But India’s backers say it can best strengthen its hand by centering its pitch on geopolitics, arguing that companies may be willing to sacrifice maximal efficiency for geopolitical considerations. India—a huge country, a regional power and a US ally—has some inherent advantages. 

Realizing this promise probably relies on India chipping away at the historic barriers to doing business there. Signs are improving. The Economist Intelligence Unit, a research group in London, ranks countries by their business environment. In its most recent rankings, which forecast conditions in the years 2023 through 2027, India passed China and the Philippines and drew closer to Indonesia and Vietnam. The only measure for which China continues to outrank India was the quality of its infrastructure.

3 key takeaways from the article

1. The unrest in Zhengzhou, China, home to the world’s largest iPhone production facility, and a half-decade of rising hostilities between the US and China, making the status quo for manufacturing in China seem less sustainable than ever. The Covid-19 pandemic has also highlighted the dangers of concentrating such a large proportion of global production in any one country. 
2. Even if such forecasts bear out, China’s status as the world’s factory would remain intact. Nor does concern about China necessarily translate to enthusiasm for India. India can offer low-cost labor and access to an enormous domestic market but has a reputation for creaky infrastructure, under-developed small local suppliers and gnarled bureaucracy. 
3. But India’s backers say it can best strengthen its hand by centering its pitch on favorable geopolitics.  Its improved ranking on ease of doing business could be another reason. 

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Topics: China, India, Manufacturing, Apple

What Switzerland Can Teach The World About Innovation

By Alexander Konovalov | Forbes Magazine | December 19, 2022

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According to the Global Innovation Index 2022, Switzerland remains the world leader in innovation for the twelfth consecutive year, followed by the United States, Sweden, the United Kingdom and the Netherlands. Analyzing the research, it is easy to notice that investment in innovation activity sharply increased from 2020 to 2021, but prospects for 2022 have been fogged not only by global uncertainty but also by low productivity of innovative solutions.

Main aspects that make Switzerland the most innovative country in the world include:  the educational system: Zurich alone has more than 22,000 students from over 120 countries); a political system that “guarantees productive stability and allows the Swiss economy to thrive; the country’s geographical position has been one of its advantages; highly skilled international workers: In fact, Switzerland leads the top 10 economies in the IMD 2021 World Talent Ranking 2021; and values, such as creativity, individuality and equality.

Even with its success, however, the Swiss technology sector still has room to improve.  Four issues that have inhibited innovation in Switzerland are:

1. The Desire To Avoid Risk.  According to research, risk avoidance is a barrier to innovation in the Swiss business sector. A certain willingness to take risks, tolerate failure and forget about what is known is needed in order to learn something new, which is the essence of innovation.
2. Startup Culture With Room For Improvement.  Deloitte ranks Switzerland as average (download required) in terms of startup culture. As startups are crucial drivers of innovation and prosperity, Switzerland must do more to facilitate an innovative and globally competitive startup scene.
3. Insufficient Level Of Digitization And Digital Skills.  In Switzerland, companies have not fully tapped into the potential of digitization, and Deloitte predicts that “once companies fully tap into this potential, productivity growth is likely to rise.”
4. Inflexibility And Perfectionism.  The Swiss pay great attention, as noted by the European Institute for Intercultural Development, to quality and perfectionism. If the first point is a well-known fact, the second point is less obvious but no less significant.

While some of these challenges may be specific to Switzerland, it would be helpful for tech leadership around the world to take heed and understand how they may be impacting their business, industry and country. If the most innovative country in the world is struggling with these issues, it’s likely that many other technology companies around the world are struggling with them, as well.

3 key takeaways from the article

1. According to the Global Innovation Index 2022, Switzerland remains the world leader in innovation for the twelfth consecutive year, followed by the United States, Sweden, the United Kingdom and the Netherlands.
2. Main aspects that make Switzerland the most innovative country in the world include:  the educational system that accomodate students from more than 120 countries only in Zurich, a stable political systsm, safe boundaries, highly skilled international workers and values, such as creativity, individuality and equality.
3. Even with its success, however, the Swiss technology sector still has room to improve.  Four issues that have inhibited innovation in Switzerland are:  The Desire To Avoid Risk, Startup Culture With Room For Improvement, Insufficient Level Of Digitization And Digital Skills, and Inflexibility And Perfectionism.

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Topics:  Innovation, Creativity, Development, Entrepreneurship

Strategy & Business Model Section

Meet the newest member of the consumer C-suite: The chief transformation officer

By AD Bhatia et al., | McKinsey & Company | December 5, 2022

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The pressure is on consumer-packaged-goods (CPG) and retail companies to transform their strategy and operations—and to do so quickly.  Consumer preferences continue to change, straining already tight margins and stranding companies that have not shifted effectively to digital and omnichannel. Supply chain problems and geopolitical turbulence are spurring regionalization, testing even the nimblest company’s ability to respond quickly. Meanwhile, persistent inflation and rising interest rates are increasing the cost of capital, forcing companies to restructure their balance sheets. Fears of a global downturn are growing; a recent survey of CEOs found that 81 percent expect a recession.

To address these challenges effectively, CPG and retail companies must reconsider their approach to transformation.   This is where the chief transformation officer (CTO) comes in. A growing number of CPG and retail company CEOs are turning to a CTO as a vital member of the executive team to lead a holistic transformation rather than relying exclusively on existing structures and roles. 

Based on the conditions leading to the transformation and level of change required within it.  These are:  Responder(these CTOs are put in place primarily to respond to a crisis or major setback), Revitalizer (expected to drive significant performance improvements, but that often comes with an added emphasis on sustained, long-term change), and Reinventor (responders and revitalizers are typically driving change within the existing strategy of the company, reinventors are often asked to lead the company through substantial strategic changes—for example, by shifting a business model).

Research indicates that although the three CTO archetypes are different, there is a common set of personal characteristics critical to making the role a success.  The successful CTO has business acumen, thinks outside of silos, can build trust and respect, is a curious and humble listener, is confident challenging the status quo, brings out the best in others, and keeps the organization’s energy up.

The most successful CTOs benefit from strong and sustained organizational support so they can drive true transformation. This support most frequently manifests itself in five ways: unwavering support from the CEO, License to engage all employees, A well-oiled ‘execution engine’, A robust incentive program, and Emphasis on the ‘soft stuff (changing mindsets and behaviors).

3 key takeaways from the article

1. The pressure is on consumer-packaged-goods (CPG) and retail companies to transform their strategy and operations—and to do so quickly.  To pursue these effectively, CPG and retail companies must reconsider their approach to transformation.
2. A growing number of CPG and retail company CEOs are turning to a CTO as a vital member of the executive team to lead a holistic transformation rather than relying exclusively on existing structures and roles.
3. Based on the conditions leading to the transformation and level of change required within it three types of CTOS i.e., responder, revitalizer and reinventor share the following characteristics.  The successful CTO has business acumen, thinks outside of silos, can build trust and respect, is a curious and humble listener, is confident challenging the status quo, brings out the best in others, and keeps the organization’s energy up.

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Topics:  Strategy, Transformation, Organizational Performance

The Best Way to Name a New Product

By David Placek | Harvard Business Review Magazine | January–February 2023 Issue

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When an established consumer packaged goods (CPG) company introduces a new product, it faces a potentially make-or-break decision: how to brand it. Tying it to an existing brand is tempting. Customers are more likely to try a new product with a familiar association, and companies have to expend fewer marketing resources to launch it. But the strategy has risks, too: Weak or failed brand extensions can harm the parent brand.

The researchers examined nearly 20,000 products introduced by U.S. CPG firms from 2000 to 2012. They determined which of three branding strategies had been used: new brand (an entirely original name), direct extension (an existing brand name plus a descriptive word or phrase), or sub-brand (an existing brand name plus a nondictionary or nonspecific word or phrase).  The researchers identified five product and firm characteristics that guided the most successful branding choices.

1. Fit with the company’s other offerings. When a new product doesn’t tie in naturally to an existing brand portfolio, customers may become confused or put off if that product uses a familiar brand name. In cases of an obvious mismatch, managers would be better off creating wholly new brands.
2. Innovativeness of the new product. Innovation is inherently risky, and so companies bringing out a truly novel product generally should use a new brand to avoid imperiling their existing one should things not pan out.  And when an innovative product has an entirely new name and enjoys commercial success, it becomes an asset that can be leveraged with appropriate brand extensions down the road.
3. The breadth of the existing portfolio. When a company owns many active brands, odds are it can find a good fit for a new product and so should favor a direct-extension brand name.
4. The risk of brand dilution. Some companies introduce so many products under one brand that the brand loses its magic.
5. Amount of advertising funds. Firms lacking the resources to provide strong advertising support should avoid the capital-intensive task of building a brand with an entirely new name. Well-resourced firms can be bolder, as they stand a better chance of getting a new-to-the-world brand name off the ground.

3 key takeaways from the article

1. When an established consumer packaged goods (CPG) company introduces a new product, it faces a potentially make-or-break decision: how to brand it. 
2. Three branding strategies to name a new brand could be: an entirely original name, an existing brand name plus a descriptive word or phrase, or an existing brand name plus a nondictionary or nonspecific word or phrase.
3. Five product and firm characteristics that guided the most successful branding choices are: fit with the company’s other offerings, the new brand name for an innovative product, consider a direct-extension brand name if the company has a good breadth of the existing portfolio, avoid the risk of brand dilution by avoiding to introduce many similar new products, avoid the capital-intensive task of building a brand with an entirely new name if doesn’t have deep pockets.

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Topics:  Strategy, Marketing, Branding

Leading & Managing Section

Barbara Corcoran’s 7 Top Tips for Succeeding Against All Odds

By Christine Lagorio-Chafkin | Inc Magazine | Winter 2022-23 Issue

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She’s been an icon of entrepreneurship for decades–first as a New York City real estate maven and then as a Shark. But even at 73, she still leans on some early lessons learned.

1. Get good with falling down.  Today, a lot of parents protect their kids from failure. According to her in her family, there were 10 kids, and her mother didn’t have time to help hem, so they failed at everything! They were in the habit of falling on their heads and getting themselves back up. That’s where you find your courage. Confidence is knowing that whatever hits you, you’re always going to get up. You’re always going to keep trying.
2. Stay in the game.  She once blew her entire year’s profit–$77,000–making videotape tours of her listings. Then, no one wanted to give them out. By sheer luck, her husband, who was a Navy captain, came back from South Korea and told her about this new thing called the internet. She immediately registered Corcoran.com, posted those listings, and had two sales that week. Her next move: she registered her competitors’ domain names, too.
3. Seek what you don’t have.  Make a list of what you’re good at and what you’re bad at, and the minute you have a dime, hire your opposite skill set. Of the hundred-some businesses she has invested in, every successful one is a partnership of two opposites with mutual respect.
4. Steal brilliant concepts.  According to her she has gotten undue credit for being an innovator. It was all thievery! Once, she was in an airport in Italy, and the announcement board was color-coded. She thought, she is gonna copy that, and she color-coded my listings. According to her she doesn’t think she has ever had an original idea in her life.
5. Value your intuition.  According to her she doesn’t listen to her head. Left-brain logic gets in the way. In the earlier years of Shark Tank, she used her head all the time. Now she is really just sizing up individuals on the basis of her gut reaction.
6. Serve your people.  Being a phenomenal leader starts by loving people and helping them be the best they can be. Really get that straight in your head: You work for them. The minute you start thinking people work for you, you’re not a good boss. If you focus on building others’ success, they reward you with loyalty and extra work–and they drag you up the ladder with them.
7. Get out of your own way.  Your biggest enemy in business is not your competitor. It’s the negative tapes you have in your head from some other era, some injury, some insecurity. It’s key! People get held back by themselves.

2 key takeaways from the article

1. Barbara Corcoran has been an icon of entrepreneurship for decades–first as a New York City real estate maven and then as a Shark. 
2. But even at 73, she still leans on some early lessons learned.  7 of these lessons are:  get good with falling down, stay in the game, seek what you don’t have in terms of skills required for your business, Steal brilliant concepts, value your intuition, serve your people, and get out of your own way.

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Topics:  Leadership, Personal Development, Resilience

Entrepreneurship Section

How to Beat Your Number One Competitor (It’s Not Who You Think)

By Reagan Pollack | Entrepreneur Magazine | December 16, 2022

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While studies such as CB Insight’s report on the top 13 reasons startups fail indicate that cash flow, no market need and internal dissent amongst founders are what leads to corporate closure, the author argue that customer apathy is actually the root cause; those are simply the symptoms. Apathy is defined as a “lack of responsiveness to something that might normally excite interest or emotion.”

In a fickle world stymied by a melee of advertising from deep-pocketed corporations and a plethora of products auditioning for our limited and desensitized attention span, it’s more than differentiation (that our business schools used to implore us to follow) that will unlock customers’ wallets.  What could help you in this unlocking efforts include:

1. Customer proximity is a competitive advantage.  Attentive, unbiased listening, feedback-driven product development and empathetic relationship-building are paramount in a transactionally driven, utilitarian and apathetic world.  The crux of this design-thinking approach can credit its notoriety to the leading design and innovation firm, Ideo (Palo Alto, Calif.). Tim Brown, Executive Chair of Ideo, offers a simplified definition for us, “Design thinking is a human-centered approach to innovation that draws from the designer’s toolkit to integrate the needs of people, the possibilities of technology, and the requirements for business success.”
2. Knowing your customer’s fears, goals and challenges helps you design experiences that delight and spark joy.  The small restaurant owner that spends considerable time sitting down with clients to revise the menu and optimize for specific personas (groups of customers that hold shared beliefs — e.g., vegan, plant-based options, Kosher items, etc.) makes a lasting impression that builds transactional empathy which counters de facto market apathy. 
3. Design thinking uncovers which emotions founders must build products and services around.  Great products and services connect on a deep, emotional level with their users. By focusing on your customer more than your competition does, you can win faster and far easier — and spend less time staring at your competition. 

For the next 30 days, instead of worrying about what your competition is up to, try focusing intently on your own market leveraging a design thinking approach. Innovation, customer service and customer retention get supremely easier once you begin to listen more and design from your customer’s point of view.

3 key takeaways from the article

1. While studies such as CB Insight’s report on the top 13 reasons startups fail indicate that cash flow, no market need and internal dissent amongst founders are what leads to corporate closure.  
2. Customer apathy is actually the root cause; those are simply the symptoms. Apathy is defined as a “lack of responsiveness to something that might normally excite interest or emotion.”
3. It’s more than differentiation (that our business schools used to implore us to follow) that will unlock customers’ wallets.  What can help you in this unlocking efforts include: use customer proximity as a competitive advantage, knowing your customer’s fears, goals and challenges helps you design experiences that could delight and spark joy; and use design thinking to uncover which emotions founders must build products and services around.

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Topics:  Startups, Business Growth, Failure