Extractive summaries of and key takeaways from the articles curated from TOP TEN BUSINESS MAGAZINES to promote informed business decision-making | Week 277 | December 30, 2022 – January 5, 2023
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Shaping Section : Ideas and forces shaping economies and industries
Why climate change is intimately tied to biodiversity
The Economist | December 20, 2022
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The natural world is a source of beauty and wonder, but it also provides humans with essential services. At a gathering on Monday in Montreal, 196 governments from around the world pledged to protect and restore 30% or more of the Earth’s water and land by 2030.
Lofty promises about preserving the world’s biodiversity have been made and broken many times before. One step towards avoiding yet more disappointment is to emphasise the close link between preserving biodiversity and the widely held goal of reaching net-zero carbon emissions.
The destruction of natural environments is depressing, relentless and hard to ignore. The area of coral reefs has halved since the 1950s and the rate of loss is accelerating. Some 10m hectares of forest are lost worldwide every year. Less known is the link between biodiversity and climate change. Each year more than a quarter of the carbon dioxide emitted by industry and agriculture is absorbed by natural ecosystems.
Around the world, investment in the energy transition is accelerating. Given that biodiversity has an important role in meeting these carbon-reduction goals, you might think that it would feature highly in these plans. Not so. For example, Joe Biden’s chief piece of climate legislation, the Inflation Reduction Act, contains about $400bn of subsidies for clean energy and other initiatives yet has too little to say about biodiversity. Faced with tighter regulation of emissions and carbon-pricing schemes, many bosses are now dedicating more time and cash to cutting their firms’ carbon footprints. But most still regard biodiversity as a nice-to-have luxury that is far beyond their remit.
That needs to change. Safeguarding biodiversity is an efficient way to control carbon emissions. More of the rising amounts of government spending being thrown at mitigating and adapting to climate change should be spent on it.
In addition, companies and investment firms that are allocating huge sums to developing clean-energy sources, re-engineering industrial processes and developing carbon-capture technologies should pay more attention to the opportunities from preserving ecosystems. By investing in biodiversity—directing capital to projects that repair an ecosystem, for example—companies can offset their emissions. By some estimates, schemes to manage carbon-rich peatlands and wetlands and to reforest cleared land could provide more than one-third of the emissions reductions that are needed to prevent more than 2°C of global warming.
Key to marshalling more capital is better measurement, so that the link between investment in natural projects, biodiversity and carbon is made clear.
3 key takeaways from the article
- The natural world is a source of beauty and wonder, but it also provides humans with essential services. At a gathering on Monday in Montreal, 196 governments from around the world pledged to protect and restore 30% or more of the Earth’s water and land by 2030. Lofty promises about preserving the world’s biodiversity have been made and broken many times before.
- One step towards avoiding yet more disappointment is to emphasise the close link between preserving biodiversity and the widely held goal of reaching net-zero carbon emissions.
- More of the rising amounts of government and corporate spending being thrown at mitigating and adapting to climate change should be spent on it. Key to marshalling more capital is better measurement, so that the link between investment in natural projects, biodiversity and carbon is made clear.
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Topics: Climate change, Biodiversity, Investment
Futuristic Vertical Farming Startups Are Struggling in the Tech Downturn
By Priya Anand | Bloomberg Businessweek | December 29, 2022
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When the market was booming, tech investors poured billions into companies designing new ways of farming. Now some of those bets appear to be wilting.
Fifth Season, a Pittsburgh-based vertical farming company, told employees this fall it was shutting down. Berlin-based Indoor Urban Farming GmbH, valued at more than $1 billion, laid off about 500 employees last month. And greenhouse startup AppHarvest, which went public through a special purpose acquisition company last year, has seen its stock sink more than 90% since its 2022 high.
Novel farming companies raised more than $2.2 billion in 2021, according to researcher AgFunder. Of those, vertical farming and greenhouse-style grow houses have attracted the most attention. Vertical farms stack crops layer by layer in warehouses outfitted with lighting and irrigation systems, often using sensors to monitor plant health and regulate watering. The promise of these systems is that as climate change causes extreme weather, indoor farms will provide a more durable and space-efficient way to feed growing populations.
Not every company appears to be crumbling. Some of the largest players in indoor farming raised monster rounds earlier this year, including Plenty, which raised $400 million in January, and Soli Organic Inc., which closed a $125 million funding round in October. But the rapid withering of smaller companies could portend a larger reckoning to come.
The challenge with investing in indoor farming companies is that they must excel at not only software, but also robotics, agricultural science and farm design, says Hans Tung, managing partner at GGV. “It’s not an easy category to crack,” he says. “Only the strongest will likely survive, and there won’t be that many great players.”
The cost of operating an indoor farm, where a company must control everything from light, heating and cooling to each drop of water, costs $300 or more per square foot, says Henry Gordon-Smith, founder and CEO of Agritecture, a farm-tech consulting firm. That compares with just a couple of dollars for a regular outdoor farm. That makes indoor agriculture startups vulnerable to a tough fundraising climate, Gordon-Smith says. If a farm hasn’t been able to achieve enough scale to show it can be viable and sell its products, it might not be able to continue funding operations.
3 key takeaways from the article
- Novel farming companies raised more than $2.2 billion in 2021. Of those, vertical farming and greenhouse-style grow houses have attracted the most attention. The promise of these is that as climate change causes extreme weather, indoor farms will provide a more durable and space-efficient way to feed growing populations.
- When the market was booming, tech investors poured billions into companies designing new ways of farming. Now some of those bets appear to be wilting.
- The challenge with investing in indoor farming companies is that they must excel at not only software, but also robotics, agricultural science and farm design. It’s not an easy category to crack. Only the strongest will likely survive, and there won’t be that many great players.
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Topics: Technology, Agriculture, Indoor Farming
McKinsey’s top takeaways from the 2022 Bloomberg New Economy Forum
McKinsey & Company | December 15, 2022
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McKinsey was the exclusive knowledge partner for this year’s Bloomberg New Economy Forum, which works to unite leaders of developed and emerging economies so they can foster sustainable and inclusive growth. In November 2022 in Singapore last month, business executives, policy makers, scientists and other leaders were joined by McKinsey’s colleagues to address topics including health, the climate, trade, finance, inflation, and the future. Some of these insights are being shared here:
It has become absolutely clear that net-zero also needs to come in a way that is providing energy that is both affordable and accessible to folks. For companies to think through, “What is their path to net-zero, and are there a series of actions that can be taken now that are actually relatively lower CapEx and relatively easier but get them some way along the journey?” is a really important reflection.
The most important imperative is to build resilience. It means both institutional resilience and individual resilience. Institutional resilience means the ability to play both defense and offense. By defense, we mean the “no regret” moves like cost optimization, restructuring, realigning your supply chains, or embedding data and technology into everything you do. When we say offense, we mean mergers and acquisitions, building new businesses, and entering new geographies and product lines. Every leader must think about both defense and offense to build institutional resilience. When we talk about individual resilience, we mean maintaining your energy—your mental, physical, spiritual, and emotional energy. We mean really leading with a sense of purpose not just for yourself, but also to give your employees and people a sense of purpose because we are also facing a war for talent.
One of the big questions that business leaders have these days is whether we are heading towards a deglobalized world. Our research highlights that we still remain in a deeply connected world, but the fabric of that connection is changing towards more intangibles and knowledge-driven flows.
We know that there’s a ton of opportunity coming from next-generation technology and digital analytics. So, be ready to invest behind those. But let’s also be clear, know where to invest in the value chain. What are the choke points in that value chain? That’s where you want to be investing behind.
3 key takeaways from the article
- In November 2022 in Singapore last month, business executives, policymakers, scientists, and other leaders were joined by McKinsey’s colleagues to address topics including health, the climate, trade, finance, inflation, and the future.
- Some of these insights are: It has become absolutely clear that net-zero needs to come in a way that is providing energy that is both affordable and accessible to folks. The most important imperative is to build resilience. It means both institutional resilience and individual resilience. In today’s world you need to be triathlete. You need to have three mindsets: one of growth, one of frugality, and one of learning. Despite the increased talk of deglobalized world, we still remain in a deeply connected world, but the fabric of that connection is changing towards more intangibles and knowledge-driven flows. We know that there’s a ton of opportunity coming from next-generation technology and digital analytics. So, be ready to invest behind those.
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Topics: Future, Technology, Economy, Globalization, Resilience
Strategy & Business Model Section
Five Ways to Strengthen the Employee-Employer Relationship in 2023
By Ally MacDonald | MIT Sloan Management Review | December 28, 2022
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The author and his team asked experts who study employee behavior and manager effectiveness the following question: How can leadership teams and managers strengthen the employee-employer relationship in 2023? Five ways are:
- Make Meaningful Work Design Changes, Big or Small. Before 2020, the structure of jobs evolved sluggishly and unimaginatively, despite evidence that traditional ways of working often harmed employee well-being. The past two years have provided leaders with an opportunity to rethink how their employees work. Those seizing this chance are applying an R&D mindset to how jobs are designed, with the goal of structuring work in ways that allow their employees to thrive while on the job and in their nonwork lives as well. It is these forward-thinking leaders who will make 2023 the most innovative year ever when it comes to how people work. And, big (e.g., four-day workweeks) or small (allowing them to shift their hours forward so that they can pick up children from school, for instance) changes to work design can be low cost, making them one of the smartest investments that leaders can make in the face of an economic downturn.
- To Resolve Conflict and Strengthen Relationships, Pay Attention to Emotions. Over the past few years, employees and employers have implicitly been renegotiating the terms of their relationships, a process that has evoked a lot of feelings. Deep down, many people are hurt including CEOs, managers and individuals. Powerful negative emotions can sink relationships, especially if they manifest as hypercriticism, contempt, defensiveness, and stonewalling. To avoid this fate, leaders must pay careful attention to the emotional patterns at work, starting with their own. Strong relationships are built on feelings of mutual respect, empathy, and care. If resentment, blame, and apathy are more common, it is essential to seek new ways of resolving conflicts and relating to one another at work.
- Recognize Who Your Employees Are as Individuals. If leadership teams and managers want to strengthen relationships with their employees, they should recognize and treat their employees as whole people. This means learning about and attending to their individual needs, including their ambitions, health, and passions. It also requires awareness of their relationships with those around them at home and at work, including their family caretaking responsibilities or the dynamics of inclusion or exclusion within their work team. Finally, leadership teams and managers should consider how their organization’s work impacts their communities in the world around them and how employees can be proud and excited to contribute to the organization’s impact.
- Learn What You Don’t Know — and Act Meaningfully on It.
- Positively Shape Work Design to Build Trust and Support Well-Being.
2 key takeaways from the article
- How can leadership teams and managers strengthen the employee-employer relationship in 2023?
- Five ways are: Make Meaningful Work Design Changes, Big or Small; To Resolve Conflict and Strengthen Relationships, Pay Attention to Emotions; Recognize Who Your Employees Are as Individuals; Recognize Who Your Employees Are as Individuals; Learn What You Don’t Know — and Act Meaningfully on It; and Positively Shape Work Design to Build Trust and Support Well-Being.
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Topics: Employees Engagement, Management Approach, Employees Behavior
By Rita McGrath and Ram Charan | Harvard Business Review Magazine | January–February 2023 Issue
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The idea that digital technologies are fundamentally changing knowledge work is not new. We’ve been talking about the paperless office for decades. But what is less well understood is just how far technology can push decision-making to the edges of the organization, allowing businesses to adopt structures that are flatter and more reconfigurable than those they’ve traditionally used.
AI and other software can create a single source of the truth and make information transparent to all authorized decision-makers on the front lines, feeding it to them directly and without filters. That means silos and layers can give way to small teams, equipped with all the competencies needed to see a project through from beginning to end. In short, new technology lets managers make decisions and experiment in a decentralized way that enables both independence and accountability at the team level.
Welcome to what Michael J. Sikorsky has called the permissionless organization—one that uses digital technologies to unleash the creative and collaborative potential of people rather than trapping them in endless reporting and coordination loops. Its structure has far fewer hierarchical layers. One layer is likely to be customer facing, where teams work with customers and clients. There is likely to be a strategic layer, in which teams determine how strategy, budgeting, project governance, and incentives are aligned; set portfolio priorities; and specify how the organization fits into its legal and regulatory environment. There is also likely to be an operational layer that manages offerings. Finally, there will be a layer that coordinates among the project teams.
Getting to such a structure won’t happen through incremental efforts—streamlining a process here or there or taking out a layer of traditional structure. It requires a complete rethink of how people should work, giving careful consideration to how and where digital technologies can be leveraged to make it easier for the people closest to the customer to add value.
In the permissionless corporation, fast, inexpensive experimentation takes over from slow, involved analysis, enabling organizations to pounce on opportunities as they arise. And at a time when speed and adaptability, rather than predictability and consistency, are the main sources of competitive advantage in a product-centric world, a model that allows people close to the customer to make as many decisions as possible is valuable. Companies with three or four layers, faster problem-solving, and a permissionless mindset will outcompete traditional players with 10 layers and slow decision-making processes.
2 key takeaways from the article
- The idea that digital technologies are fundamentally changing knowledge work is not new. But what is less well understood is just how far technology can push decision-making to the edges of the organization, allowing businesses to adopt structures that are flatter and more reconfigurable than those they’ve traditionally used.
- AI and other software can create a single source of the truth and make information transparent to all authorized decision-makers on the front lines, feeding it to them directly and without filters. That means silos and layers can give way to small teams, equipped with all the competencies needed to see a project through from beginning to end. In short, new technology lets managers make decisions and experiment in a decentralized way that enables both independence and accountability at the team level – Welcome to what Michael J. Sikorsky has called the permissionless organization.
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Topics: Organizational Structures, Teams, Technology
Leading & Managing Section
What Could Be On The Horizon This Year For Corporate Governance
By Edward Segal | Forbes Magazine | December 2, 2023
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The way in which companies and organizations are governed continues to evolve with the times. Here’s what may be in store for business leaders and boards of directors in terms of governing-related policies, procedures, practices, and priorities in the next 12 months, according to CEOs, analysts and other observers.
More Accountability. Shareholders are going to hold boards more accountable. There will be wholesale changes at many big companies whose boards and management fail to deliver and do not act. The recent news in late 2022 about the CEO of Disney is causing many shareholders to question the board of director’s actions or lack of action.
Greater Board Engagement. Shareholders will demand boards that are more engaged with companies. Moreover, they will call out board of director members who sit on too many boards and simply show up at meetings and collect a check. The weakened economy will continue to keep [the] board of directors in check and accountable to help lead.
More Emphasis On Board Diversity. There has been a growing recognition of the importance of diversity in the boardroom, and companies are increasingly being encouraged to have boards that reflect the diversity of their stakeholders and the communities in which they operate.
Increased Shareholder Activism. Shareholder activism has been on the rise in recent years, and we expect to see this trend continue in 2023. Investors are increasingly using their voting rights to influence corporate governance and push for changes that they believe will benefit shareholders.
Sustainability A Priority. The volume of [new] sustainability-focused regulations will significantly increase in 2023 and create new drivers for enterprises to push change throughout their organizations.
Updated Guidelines And Regulations. Regulators and standard-setting bodies around the world are continuously updating their guidelines and regulations related to corporate governance.
ESG On Back Burner. As the economy continues to weaken, companies will be focusing on profits and stability rather than focusing on ESG issues.
Impact Of Technology. Companies will likely to invest more on technology to improve communication and transparency with shareholders and other stakeholders, as well as to streamline governance processes and reduce the risk of errors.
More To Come? It is always a good idea for companies to stay informed about the latest developments in the field and to continuously assess and improve their corporate governance practices.
3 key takeaways from the article
- The way in which companies and organizations are governed continues to evolve with the times.
- What may be in store for business leaders and boards of directors in terms of governing-related policies, procedures, practices, and priorities in the next 12 months, according to CEOs, analysts, and other observers? 6 trends are: More Accountability, Greater Board Engagement, More Emphasis On Board Diversity, Increased Shareholder Activism, Sustainability A Priority, Updated Guidelines And Regulations, ESG On Back Burner because of increased focus on profitability during recession times, a continuation of increased use of technology for improved communication and transparency, and more to come.
- And more to come. So it is always a good idea for companies to stay informed about the latest developments in the field and to continuously assess and improve their corporate governance practices.
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Topics: Corporate governance, Leadership, Board of directors
Entrepreneurship Section
Startup Success Comes Slowly. Don’t Let Your Ambition Lead To Mistakes
By Joe Procopio | Inc Magazine | December 29, 2022
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One of the most difficult things to grip with is that the success your are constantly striving for always takes longer than you want it to. If it happens at all. The fire of ambition that’s fueling your passion and effort can also burn you pretty badly when it prompts you to do things that might not be in the best interest of your business. If you can anticipate the bad behavior that ambition can surface, you can avoid most of these pitfalls. When this happens, here are the behaviors you should try to avoid:
- Injecting pressure into sales and marketing. Just because you constantly hear a ticking clock in your head doesn’t mean that your customers need to hear it too. One of the first signs of frustration is when your marketing and sales messaging becomes more frequent and more pressurized. You double your efforts, you push prospects a little harder. Instead, review your marketing and sales strategy, and refine your message and approach. Then make small changes, one at a time, and wait for the results. It’s painful and requires patience, but it has a far better success rate.
- Annoying existing customers. You can tell pretty quickly when you are thrashing around without direction. You dream up random and useless features. You devise poorly thought-out experiments that dampen the user experience. The quality of build and service starts to fall off. Instead, love the customers you have and learn from them. Before you fast-forward on your roadmap, you check in with your customers to make sure you are giving them what they need and make sure they’ll see value in whatever next steps you want to move to the front of the queue.
- Pushing the team too hard. The quickest way to destroy your own business is to throw money at the wrong places. The second quickest way is to lose your team. Instead when you are overwhelmed by a lack of progress, stop thinking about where your business is supposed to be and start thinking about where you can take it next. You should think in small chunks, without worrying about what those small chunks mean for the big picture.
- Diluting the vision. The easiest way to stop worrying about a lack of progress is to do things that look like progress. One way to do this is by focusing on metrics that don’t directly impact revenue and are easier to achieve. A much sneakier way to do this is to start generating business that isn’t in line with the vision you set out for your startup in the first place. Instead, push harder for what you believe in. Stick to your guns. And be patient.
3 key takeaways from the article
- The fire of ambition that’s fueling your passion and effort can burn you pretty badly if the success you are constantly striving for takes longer than you wants it to. This prompts you to do things that might not be in the best interest of your business.
- If you can anticipate the bad behavior that ambition can surface, you can avoid most of these pitfalls.
- These pitfalls and their solutions are: Injecting pressure into sales and marketing instead review your marketing and sales strategy, and refine your message and approach; annoying existing customers instead, love the customers you have and learn from them; Pushing the team too hard instead stop thinking about where your business is supposed to be and start thinking about where you can take it next; and diluting the vision instead, push harder for what you believe in, stick to your guns, and be patient.
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Topics: Startup, Entrepreneurship, Success
Avoid These 3 Common Entrepreneur Death Traps
By Anthony D. Anselmo | Entrepreneur Magazine | December 27, 2022
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Inexperienced founders and first-time entrepreneurs who are excited about entering the realm of entrepreneurship often find themselves focused on “not important right now” items. To clarify the point, let’s look at a general overview of priorities broken down between experienced and inexperienced entrepreneurs:
Inexperienced order of objectives: figure out a name, see if it’s available; file to incorporate; wait for incorporation to go through, then get a business bank account; get a logo; get branded apparel; get the business cards; start to build a prospect list; and get a customer. The experienced flow of objectives: get a customer; continue to build a prospect list; figure out a name; may be get a contact card etc.
A list of three common flaws first-time entrepreneurs and founders face when starting a business are:
- Understand the difference between an order of objectives and a flow of objectives. Inexperienced entrepreneurs tend to think that things must be done in a set order to accomplish a goal. That thinking — especially in the early stages — slows down execution rates because they bottleneck the next thing to be done. This causes friction, leading to burnout in a new entrepreneur. Meanwhile, an experienced entrepreneur knows that multiple objectives will be in play, working to accomplish simultaneously — especially at the beginning.
- Understand the risk and rewards of priorities. Every action or inaction has a risk or opportunity cost, especially at the beginning, where the compounding effect is more significant. That being the case, looking at objectives in a risk vs. reward manner gives us guidance on tackling the objective list. An experienced founder will start by bringing on a new customer. It is rarely risky, and the reward is great — there is business growth, especially compounded over time. But following the inexperienced route risks all the resources used in steps 1-8 (time, money, mental capacity, etc.) in hopes of generating the reward of 9, bringing on a new customer.
- Understand the type of entrepreneur you are. It’s not a one size fits all role. Entrepreneurship mirrors life in that you cannot know who you are and how you operate entirely until you live through it. You might think that you can tackle one step by one step, only to discover that you are the type that needs to make progress on all fronts intermittently.
3 key takeaways from the article
- Inexperienced founders and first-time entrepreneurs who are excited about entering the realm of entrepreneurship often find themselves focused on “not important right now” items.
- A general overview of priorities broken down between experienced and inexperienced entrepreneurs are – Inexperienced order of objectives: figure out a name, see if it’s available; file to incorporate; wait for incorporation to go through, then get a business bank account; get a logo; get branded apparel; get the business cards; start to build a prospect list; and get a customer. The experienced flow of objectives: get a customer; continue to build a prospect list; figure out a name; may be get a contact card etc.
- A list of three common flaws first-time entrepreneurs and founders face when starting a business are: understand the difference between an order of objectives and a flow of objectives, understand the risk and rewards of priorities, and understand the type of entrepreneur you are.
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Topics: Startups, Entrepreneurship, Success, Failure