Extractive summaries of and key takeaways from the articles curated from TOP TEN BUSINESS MAGAZINES to promote informed business decision-making | Week 276 | December 23-29, 2022
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Shaping Section : Ideas and forces shaping economies and industries
Why the Gulf’s oil powers are betting on clean energy
The Economist | December 19, 2022
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In the past the grandees of the Gulf’s energy industry limited themselves to defending fossil fuels. Now many profess a commitment to decarbonisation. Saudi Arabia and Kuwait have announced targets of net-zero emissions of greenhouse gases by 2060. The UAE and Oman say they will get there by 2050. Qatar has no net-zero target, but says it will cut emissions by a quarter by 2030 relative to a scenario that assumes business as usual. All the Gulf countries have signed the Global Methane Pledge, which commits them to reduce emissions of that potent greenhouse gas. The UAE will even host the annual UN climate summit in 2023.
Some suspect this is greenwash. On this view, the Gulf’s governments are too reliant on the revenues generated by the national energy firms—which account for a big share of state budgets—to be serious about decarbonisation. Yet an examination of the leading companies’ investment plans reveals a genuine—and in some cases rather large—bet on green technologies. This is worth scrutinising, because the firms behind the effort matter beyond their region.
The Gulf oil champions’ approach rests on two pillars. The first is deep brown: it involves doubling down on oil and gas. Bolstered by high crude prices, the region’s energy firms are investing heavily to expand output.
Oilmen betting on oil is nothing new. But the Gulf giants’ latest wagers suggest they no longer have their heads in the sand about the future of oil demand. They are keenly aware that their best customers in the developed world are going to crack down on carbon emissions. They enjoy a natural advantage. Their hydrocarbon reserves are among the least carbon-intensive to extract. The Emiratis and the Saudis have also made an effort to reduce this carbon intensity further with high operational efficiency and low gas flaring.
The second pillar of the Gulf’s strategy is more intriguing. It involves investing part of today’s fossil windfall in the clean-energy technologies of tomorrow. The region’s governments are making some of the world’s biggest bets on carbon capture and storage, renewables and hydrogen.
If the hydrogen economy takes off, it could produce between $120bn and $200bn in annual revenues for Gulf countries by 2050. That is far less than they now make from oil and gas; Aramco alone had sales of more than $300bn in the first half of 2022. But it is serious money—and, given the real risk of an end to the oil bonanza, suggests that the Gulf’s green efforts ought to be taken seriously.
2 key takeaways from the article
- In the past the grandees of the Gulf’s energy industry limited themselves to defending fossil fuels. Now many profess a commitment to decarbonisation. Some suspect this is greenwash. Yet an examination of the leading companies’ investment plans reveals a genuine—and in some cases rather large—bet on green technologies.
- The Gulf oil champions’ approach rests on two pillars. The first is deep brown: it involves doubling down on oil and gas. The second pillar of the Gulf’s strategy is more intriguing. It involves investing part of today’s fossil windfall in the clean-energy technologies of tomorrow. The region’s governments are making some of the world’s biggest bets on carbon capture and storage, renewables and hydrogen.
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Topics: Green Energy, Middle East
Economic conditions outlook during turbulent times, December 2022
By Jeffrey Condon et. al., | McKinsey & Company | December 21, 2022
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At the outset of 2022, executives were more likely to be positive than negative about current conditions and prospects for the global economy and their countries’ economies. Views became more somber in the June survey. Since June, respondents have become less negative about the global economy. They are much more likely now than in June to report improvement or stable conditions and to expect conditions to improve or stay the same over the next six months, though they remain more likely to expect declining than improving conditions.
On the other hand, respondents’ views on their countries’ economies overall remain largely unchanged from the June and September surveys. Respondents continue to be about as likely to expect improvement in their economies as they are to expect declining conditions over the coming months.
Looking at risks to global economic growth over the next 12 months, geopolitical conflicts remain the top-cited risk for the fourth survey, while inflation continues to be the second-most-cited global threat and the top concern domestically.
As 2022 comes to an end, the latest survey shows rising interest rates as a growing concern domestically, surpassing concerns over energy price volatility, the second-most commonly cited risk in June and September. Most respondents (63 percent) expect interest rates in their countries to increase over the next six months.
The latest survey shows regional shifts in what respondents see as the main risks to their countries’ growth. Among respondents in Europe, the risk from volatile energy prices reported in September has dropped from the top concern to the third-most-cited risk among respondents in the latest survey, behind inflation and geopolitical instability. In Asia–Pacific, as more interest rate hikes hit the market, respondents are now almost twice as likely as in September to cite rising interest rates as a risk. Greater China remains an outlier as the only region in which respondents most often cite the COVID-19 pandemic as a top risk, followed by inflation.
When thinking about the externalities that might have the greatest effects on organizations over the next 20 years, respondents most often point to technical innovation, followed by energy and natural resource considerations—and, of the potential forces that could affect organizations, those are the two that respondents most often say their organizations are taking significant steps to prepare for
3 key takeaways from the article
- For the third consecutive quarter, executives responding to the latest McKinsey Global Survey on economic conditions remain more wary about the future of the global economy and their countries’ economies than they were at the start of 2022.
- Respondents are less likely now than in the previous two surveys to report worsening global conditions—or to expect them in the months ahead.
- Respondents continue to point to geopolitical conflicts and inflation as the most pressing economic risks over the next year, while concerns about rising interest rates grow domestically.
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Topics: Global Economy, Geopolitics Conflict, Interest Rate, Inflation
How India’s Startups Are Adapting As The Global Recession Reaches Its Shores
By Karan Kashyap | Forbes | December 16, 2022
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This year, India’s startups have suffered from a slew of problems, and they have been forced to take countermeasures to ensure their survival amid a slowing economy. For the majority of 2022, the rupee has been depreciating to an all-time low against the U.S. dollar, the wholesale price index has been hovering at more than 10%, and retail inflation has been above 6%, the upper limit set by the Reserve Bank of India. To curb these inflationary numbers, the central bank has aggressively tightened its monetary policy.
The interest rates paid by companies on borrowed capital and consumers’ monthly payments (EMIs—equated monthly installments) have also been increasing. Over the past few months, this has made business investment and activity costlier and triggered a collapse in demand for the products and services offered by many startups, with consumers cutting back on spending. Other than higher interest rates from banks, India’s stocks markets have offered no respite. India’s benchmark stock indices–BSE Sensex and NSE Nifty50–have only managed to climb 5% this year, so raising money via an initial public offering would not be viable for most startups.
The total capital raised by Indian startups has decreased in each quarter this year, from $11 billion in the first quarter (January-March) to $7 billion in the second quarter and just $2.7 billion in the third. Cumulatively, they managed to raise $44 billion in 2022, compared to last year’s $64.8 billion.
During slowdown, startups in India have been left with no option but to restructure their operations, to cut costs and thereby increase profitability from the same scale of operations. They are streamlining businesses and services to focus on core competencies. For example, ride sharing market leader Ola has announced that it would shut down Ola Play and Ola Dash.
While following footsteps of their tech counterparts worldwide, where 853 tech firms, including the likes of Meta, Google and Amazon have laid off over 137,492 workers. In India, there have been steep hiring cuts, recruitments of permanent staff have dipped by a significant 61% and new hires are being offered significantly lower pay scales. Nearly 18,000 employees have been fired by around 52 startups, specifically in the edtech sector (Byju’s, Unacademy, Vedantu).
In a interconnected globalized world, Indian startups find themselves reaping the seeds sown by more industrialized countries. As the recessionary winds first originated from the world’s biggest economy, the U.S., reached the U.K., Germany, and the euro zone. The governments of these regions increased the interest rates to protect their economies.
However, even under the current dismal scenario, companies are banking their hopes on a silver lining in their large domestic market.
3 key takeaways from the article
- This year, India’s startups have suffered from a slew of problems, and they have been forced to take countermeasures to ensure their survival amid a slowing economy.
- During slowdown, startups in India have been left with no option but to restructure their operations, to cut costs even by laying offer worlds and thereby increase profitability from the same scale of operations. They are streamlining businesses and services to focus on core competencies.
- However, even under the current dismal scenario, companies are banking their hopes on a silver lining in their large domestic market.
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Topics: Startups, Entrepreneurship, Global Economy, Recession
Strategy & Business Model Section
The Overlooked Key to a Successful Scale-Up
By Jeffrey F. Rayport, et. al., | Harvard Business Review Magazine | January–February 2023 Issue
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King Digital Entertainment, SoundCloud, and WeWork all proved the value of their offerings by achieving impressive growth in numbers of customers and theoretically were positioned for market dominance. But King alone was able to turn its top-line growth into comparable profit growth during the extrapolation phase.
Drawing on an examination of dozens of rapidly growing ventures and the authors’ experiences of teaching courses on scaling up enterprises at their respective business schools, they have concluded that what made the difference was that King Digital Entertainment engaged in a developmental stage the authors call extrapolation, in which a company explores profitable growth options while exploiting economies of scale and scope. This stage isn’t part of traditional organization theory, which says that businesses are in either exploration mode or exploitation mode.
During this stage start-ups pursue two goals. The first is to confirm the extent to which product-market fit shows that there is demand for the company’s offering. The second is to achieve what they authors call profit-market fit—to demonstrate not only that the venture can ramp up revenue rapidly but that every new customer brings in additional revenue and incurs only marginal cost—the key to profitable growth.
What is the key to successful extrapolation? It demands new ways of thinking about strategy, operations, financing, and speed. It also requires approaches to organizational structure, culture, and talent that are distinct from those of the other two phases. Start-up and enterprise leaders alike must consciously treat extrapolation as a specific stage in the development of any new venture or new-to-market offer.
The authors’ research shows that ventures that succeed at extrapolation have three characteristics:
- They understand and leverage the conditions that are critical for success.
- They follow a rigorous extrapolation process.
- They have ambidextrous organizations that can manage strategic experimentation and disciplined execution simultaneously.
3 key takeaways from the article
- King Digital Entertainment, SoundCloud, and WeWork all proved the value of their offerings by achieving impressive growth in numbers of customers and theoretically were positioned for market dominance. But King alone was able to turn its top-line growth into comparable profit growth during the extrapolation phase.
- What made the difference was that King Digital Entertainment engaged in a developmental stage extrapolation, in which a company explores profitable growth options while exploiting economies of scale and scope.
- Ventures that succeed at extrapolation have three characteristics: they understand and leverage the conditions that are critical for success, they follow a rigorous extrapolation process, and they have ambidextrous organizations that can manage strategic experimentation and disciplined execution simultaneously.
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Topics: Startups, Strategy, Growth, Business Model
Leading & Managing Section
If You Are Known for These 5 Behaviors, Your Emotional Intelligence Could Be Higher Than Most People
By Marcel Schwantes | Inc Magazine | December 24, 2022
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Whatever role you’re in, practicing the behaviors of emotional intelligence is key to enhancing your professional development and growth as a leader. To that end, here are five top EQ tips that will contribute to your career success.
- Be assertive when the going gets tough. People in influential roles will face conflict, but one must be assertive when handling all situations–even instances that happen to be tense. This means not apologizing when asking a colleague or team member to rise up to your standards or not letting others take credit for your ideas. While a passive-aggressive or overly aggressive attitude alienates and prevents success, facing conflict with an assertive mindset enacts progress to benefit the whole team.
- Be flexible during times of change. Priorities shift in almost every company and job. Those who are willing to go with the flow during a transition are the people you want on a team. They have the flexibility to deal with uncertain and unpredictable situations, which is a hallmark of true EQ.
- Question your negative thoughts. We all have that voice of criticism in our heads that spins negative things that may not be true. To deal with the inner critic, challenge negative thinking with a simple exercise: Whenever you feel sad, mad, fearful or out of control, write down what you’re thinking. Then question your thoughts. Is it true? Just those three words can cause a huge shift in how you perceive things. Getting our thoughts right and short-circuiting a negative spiral by questioning our thoughts can have a transformative effect on our outlook, relationships, and work performance.
- Practice good boundaries. Billionaire Warren Buffett learned a long time ago that the greatest commodity of all is time. One of his secrets to success? He simply mastered the practice of setting boundaries for himself. The mega-mogul once said: “The difference between successful people and really successful people is that really successful people say no to almost everything.” This means saying no to opportunities and things that don’t speak to your values or further your mission in life. It means setting boundaries on spending time with uninspiring, critical, or negative people that drag you down. It means setting limits on overworking and neglecting self-care.
- Live by your values. Values motivate us and keep us in check for doing the right thing. To live by your values, an exercise of clarifying what they are is your first step. Make a list of what is non-negotiable in how you operate in business, work, relationships, marriage, parenting, etc. Are these values being fulfilled in your life right now? Once you get that straightened out, prioritize those values. Check the list: What are the five most important values on it? Are you spending a significant portion of your time living from them?
2 key takeaways from the article
- Whatever role you’re in, practicing the behaviors of emotional intelligence is key to enhancing your professional development and growth as a leader.
- Five top Emotional Intelligence tips that will contribute to your career success are: be assertive when the going gets tough, be flexible during times of change, question your negative thoughts, practice good boundaries, and live by your values.
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Topics: Leadership, Emotional Intelligence, Creativity
Entrepreneurship Section
5 Steps for Building Trust and Becoming the Go-to in Your Field
By Adam Petrilli | Entrepreneurship | December 26, 2022
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Any entrepreneur knows that a critical aspect of growing one’s business and elevating your brand is to step up as a thought leader in your field. When it comes time to build your credibility and find your audience, it may seem impossible to know where to start. Social media is crowded these days — how does anyone stand out from the crowd? Becoming a thought leader takes dedication and hard work, but it can be done with the right strategy and an honest approach. The following five crucial tips can help you in becoming a go-to voice in your field.
Develop your own voice. It’s crucial to define your own voice. Audiences these days are hyper-aware of inauthenticity and quickly pick up on false optimism or incorrect knowledge. Stay true to yourself and your expertise when sharing your insights. Similarly, the only way you can really stand out from the crowd is by being yourself! Don’t try to emulate others you already see in the field. Originality always wins out.
Use each platform thoughtfully. Today’s vast array of social platforms have very different uses and audiences, so you’ll want to share your thoughts in a variety of ways across each while remaining true to your overall message. Each platform offers significant benefits when used correctly, so research (and use) them before posting, and don’t try a one-size fits all strategy.
Listen to others. An essential part of remaining an authority in your field is constantly seeking knowledge and growing. From reading books and articles to respecting diverse voices, make room in your life to expand your mind so that you can remain at the top of your game.
Analyze what’s working. When building your audience and brand, you’ll want to take a step back regularly and see what resonates with people. Are certain parts of your message getting positive feedback more than others? Are there specific questions that crop up again and again? Be sure to incorporate any statistics and audience feedback into your posting schedule so you’re not simply speaking into a void. Your audience wants to feel that they’re having a two-way discussion, so distilling your message to what they want to learn is key to an engaged, long-term audience relationship.
Get out into the real world. While social media, blogs and podcasts are crucial for thought leadership in today’s modern age, don’t forget to get out from behind your computer screen from time to time. Real-life conversations can significantly benefit your thought leadership growth and demonstrate to online audiences that you genuinely care about your industry. Attend conferences and panels in your field and take the opportunity to network with others.
3 key takeaways from the article
- Any entrepreneur knows that a critical aspect of growing one’s business and elevating your brand is to step up as a thought leader in your field.
- When it comes time to build your credibility and find your audience, it may seem impossible to know where to start. Social media is crowded these days — how does anyone stand out from the crowd? Becoming a thought leader takes dedication and hard work, but it can be done with the right strategy and an honest approach.
- The following five crucial tips can help you in becoming a go-to voice in your field: develop your own voice, use each platform thoughtfully, listen to others, analyze what’s working, and get out into the real world.
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Topics: Entrepreneurship, Leadership, Personal Development