Extractive summaries of and key takeaways from the articles curated from TOP TEN BUSINESS MAGAZINES to promote informed business decision-making | Week 283 |February 10-16, 2023
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Shaping Section : Ideas and forces shaping economies and industries
The battle for internet search
The Economist | February 9, 2023
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For more than 25 years, search engines have been the internet’s front door – AltaVista followed by Google. But nothing lasts for ever, particularly in technology. Companies were dethroned because they fumbled big technological transitions. Now tech firms are salivating over an innovation that might herald a similar shift—and a similar opportunity. Chatbots powered by artificial intelligence (AI) let users gather information via typed conversations.
Leading the field is Chatgpt, made by Openai, a startup. By the end of January, two months after its launch, Chatgpt was being used by more than 100m people, making it the “fastest-growing consumer application in history”, according to ubs, a bank. Hence the flurry of announcements, as rival firms including Microsoft, Google, and Baidu try to seize the initiative.
But can chatbots be trusted, and what do they mean for search and its lucrative advertising business? Do they herald a Schumpeterian moment in which ai topples incumbent firms and elevates upstarts? The answers depend on three things: moral choices, monetisation and monopoly economics.
Chatgpt often gets things wrong. It has been likened to a mansplainer: supremely confident in its answers, regardless of their accuracy. Unlike search engines, which mostly direct people to other pages and make no claims for their veracity, chatbots present their answers as gospel truth. Chatbots must also grapple with bias, prejudice and misinformation as they scan the internet. There are sure to be controversies as they produce incorrect or offensive replies. All this will raise questions about censorship, objectivity and the nature of truth.
Can tech firms make money from this? Running a chatbot requires more processing power than serving up search results, and therefore costs more, reducing margins. Other models will surely emerge: charging advertisers more for the ability to influence the answers that chatbots provide, perhaps, or to have links to their websites embedded in responses. But will people use them if their objectivity has been compromised by advertisers?
Then there is a question of competition. It is good news that Google is being kept on its toes by upstarts like Openai. But it is unclear whether chatbots are a competitor to search engines or a complement.
Chatbots raise hard questions, but they also offer an opportunity to make online information more useful and easier to access. As in the 1990s, when search engines first appeared, a hugely valuable prize—to become the front door to the internet—may once again be up for grabs.
3 key takeaways from the article
- For more than 25 years, search engines have been the internet’s front door – AltaVista followed by Google. But nothing lasts for ever, particularly in technology. Companies were dethroned because they fumbled big technological transitions. Now tech firms are salivating over an innovation that might herald a similar shift—and a similar opportunity. Chatbots powered by artificial intelligence (AI) let users gather information via typed conversations.
- But can chatbots be trusted, and what do they mean for search and its lucrative advertising business? Do they herald a Schumpeterian moment in which AI topples incumbent firms and elevates upstarts? The answers depend on three things: moral choices, monetisation and monopoly economics.
- Chatbots raise hard questions, but they also offer an opportunity to make online information more useful and easier to access.
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Topics: Technology, Artificial Intelligence, Competition
Geopolitics Are Changing. Venture Capital Must, Too.
By Hemant Taneja and Fareed Zakaria | Harvard Business Review | February 10, 2023
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The collapse of the Soviet Union reconfirmed (the collapse of the Berlin wall confirmed) the U.S.’s role as the world’s sole, uncontested superpower, and for nearly three decades thereafter, the world experienced something very rare: the absence of great power competition. This led to the adoption of American policy preferences in many parts of the world — free market economics and trade, democratic politics, and open technology platforms.
This period of free market reform, globalization, and technological transformation also had the effect of lowering prices and dampening inflation. These forces, as well as generally accommodative monetary policy around the world, produced a very unusual macroeconomic environment — one that was conducive to new financial products that spurred innovation and growth. For industries like private equity, and even venture capital, the ability to buy, refinance, and sell assets became a powerful profit multiplier that allowed even marginal investments to generate strong, positive returns.
Like all holidays, however, the world’s “holiday from history” has ended. American dominance has begun to wane and great power competition is on the rise — evidenced most clearly by the rise of China, but also with regional blocs like the EU and countries such as India and Brazil. At the same time, the impact and increased frequency of global crises have laid bare the critical vulnerabilities of a tightly connected system that prioritized openness and speed over safety and stability. As countries around the world sought to recover from each of these challenges and protect themselves against the next, and as great power competition rose, countries began to look beyond economics and global efficiency and re-prioritize domestic politics and global resilience.
While many have posited that such shifts will result in a period of de-globalization — with countries attempting to undo all of the interdependencies of the past 30 years in order to fortify their own national systems — such predictions miss a basic truth: most national economies depend on globalization to sustain their domestic industries.
It is both too late and too undesirable to entirely unwind globalization, but a renewed focus on national politics will cause it to take a different form: one of re-globalization. In a re-globalized world order, countries will seek to balance the benefits of globalization with the desire to build greater independence and resiliency in their most complex and systemically important industries: healthcare, defense, energy, manufacturing, and financial services. This will require enormous amounts of capital and patience as countries and companies look to strengthen and re-architect their own domestic R&D, manufacturing, and distribution networks. The profound nature of these challenges will require an entirely new approach to company building and innovation, altering the model and nature of venture capital itself.
In this new era of re-globalization, by contrast, technology will be called upon to solve much more complex and high-stakes structural challenges without the benefits of unrestricted markets, low interest rates, and “easy money.” This will require a new model of venture capital, one that espouses larger capital commitments, longer investment horizons, greater levels of collaboration, and more significant degrees and depth of governance.
New companies tackling such challenges will be born with completely different levels of ambition, business models, and distribution networks than what we have seen before and progress to achieve these goals will not be measured in years, or perhaps even decades – far longer than the ten-year fund lives that define today’s venture capital model.
Additionally, as the financing requirements for such challenges mount in a tightening global economic environment, technology will need to provide the leverage that financial engineering and government funding can no longer underwrite. The pace and scale of the investment will require technology to partner with businesses and existing systems in unprecedented ways.
While the challenges of re-globalization will require new models of financing and collaboration, their most significant impact will be on the level of responsibility and depth of governance that venture capitalists will have to assume given the profundity of these challenges and their potential implications on people and societies. And this responsibility becomes ever more acute as we look to build next-generation defense systems, decentralized financial networks, and utilize artificial intelligence in areas previously left to human reasoning and judgment.
3 key takeaways from the article
- The era of American hegemony is ending. It is being replaced by a new geopolitical world order defined by great power competition and increased nationalism, a transition that will have enormous consequences for the global economy.
- This new environment will mean the end of, or at least a shift away from, the unique conditions that fueled global growth and development for the past 30 years, and will introduce increasingly complex, systemic challenges that will require new types of technology, innovation, and collaboration to solve.
- The technologies and companies that will thrive in this new era will require more capital, more patience, and greater levels of governance than before. In order to build and support the next generation of enduring businesses, we need to develop a new approach to company building, one that transcends, and ultimately redefines, venture capital.
(Copyright)Topics: Global Economy, Globalization, Technology, Nationalism, Venture Capital
Americans are ready to test embryos for future college chances, survey shows
By Antonio Regalado | MIT Technology Review | February 9, 2023
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About 40% percent of Americans who told a pollster they’d be more likely than not to test and pick IVF embryos for intellectual aptitude, despite hand-wringing by ethicists and gene scientists who think it’s a bad idea.
The opinion survey, published in the journal Science, was carried out by economists and other researchers who say surprisingly strong support for the embryo tests means the US might need to hurry up and set policies for the technology. To put the results in context, the percentage of people who would test embryos for potential smarts is similar to the proportion of Americans who say they would consider an electric vehicle as their next car purchase.
The new poll compared people’s willingness to advance their children’s prospects in three ways: using SAT prep courses, embryo tests, and gene editing on embryos. It found some support even for the most radical option, genetic modification of children, which is prohibited in the US and many other countries. About 28% of those polled said they’d probably do that if it was safe.
One problem with the tests is that it will be challenging to prove they really work. It would take decades, for instance, before anyone could judge whether they accurately predicted a newborn’s health risks. And if the tests do work, that’s also a problem, according to Meyer and her coauthors, who include the geneticist Patrick Turley and the economist Daniel J. Benjamin. They say embryo tests could “exacerbate existing inequalities” in society—for instance, if only people in certain socioeconomic groups use them to have healthier, taller, or smarter offspring.
Specialists have been raising concerns about predictive embryo tests in general: last year, the European Society for Human Genetics called them an “unproven, unethical practice” and suggested they be forbidden until policies governing the use of the technologies can be developed.
As far as MIT Technology Review could determine, no child has yet been picked from a petri dish on the basis of its educational potential score. But that moment may not be far off. Early users of Genomic Prediction’s health scores who’ve spoken about their experience come from segments of society with strong preoccupations with cognitive performance.
3 key takeaways from the article
- About 40% percent of Americans told a pollster they’d be more likely than not to test and pick IVF embryos for intellectual aptitude.
- One problem with the tests is that it will be challenging to prove they really work. It would take decades, for instance, before anyone could judge whether they accurately predicted a newborn’s health risks. And if the tests do work, that’s also a problem this could “exacerbate existing inequalities” in society—for instance, if only people in certain socioeconomic groups use them to have healthier, taller, or smarter offspring.
- Specialists have been raising concerns about predictive embryo tests in general: last year, the European Society for Human Genetics called them an “unproven, unethical practice” and suggested they be forbidden until policies governing the use of the technologies can be developed.
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Topics: Technology and Humans, Biotechnology, Education
Industry Insights Section : Trends and anamolies shaping an industry
For love of meat: Five trends in China that meat executives must grasp
By Anne Grimmelt | McKinsey & Company | February 10, 2023
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China is the world’s largest consumer meat market. Meat consumption in China has increased steadily since the early 1990s. In 2021, the Chinese consumed almost 100 million tons of meat—27 percent of the world’s total and twice the total consumption in the United States.
But per capita meat consumption in China lags that of western countries. In 2021, per capita consumption was just half that of the United States. This picture is likely to change as increasing urbanization and rising income levels make meat more available and more affordable for Chinese consumers. Five trends are shaping this market are:
- The Chinese meat market is bifurcating. More than half of Chinese consumers eat meat regularly. This is consistent with US and UK meat consumption. For these consumers, meat remains central to their diet despite an overall consumer trend of spending more conservatively. Slightly less than half of Chinese consumers fit the survey’s category of “conscious consumers,” that is, people committed to eating little or no meat.
- Consumer meat preferences are poised for change. Pork dominates the meat menu in China. The 57 million tons of pork consumed in China in 2021 accounted for 60 percent of total meat consumption.
- Product safety and taste govern meat-purchasing decisions. When buying meat, Chinese consumers look, first and foremost, for healthiness and product safety and for quality and taste.
- Demand for convenience is reshaping meat consumption patterns. Like their global peers, Chinese consumers mostly buy uncooked meat for at-home consumption. But as younger consumers exert more purchasing power, convenience looms larger as a key buying factor. These consumers typically feel great work pressure and have little time to cook, so they express interest in prepared meat (precooked or fried) and ready-to-eat meals delivered to their homes. Chinese consumers also report spending more money to eat meat in restaurants, in contrast to consumers in the peer survey countries, who spend more on meat to eat at home. Online purchasing appeals to consumers demanding convenience.
- Sustainability is gaining awareness but little influence. As it does not translate into enthusiasm for alternative meat.
To capture a meaningful share of this market, global meat players should set entry strategies that reflect insights into Chinese meat consumption, Product safety and taste govern meat-purchasing decisions. Companies can explore potential white spaces for establishing competitive advantage. Companies can consider how they might shape the go-to-market strategy and product portfolio to meet consumers’ demand for convenience. Finally, companies may find attractive opportunities in tailoring value propositions to consumer concerns about health and sustainability.
3 key takeaways from the article
- China is the world’s largest consumer meat market. But per capita meat consumption in China lags that of western countries. This picture is likely to change as increasing urbanization and rising income levels make meat more available and more affordable for Chinese consumers.
- Five trends shaping the Chinese meat market are: it is bifurcating, consumer meat preferences are poised for change, product safety and taste govern meat-purchasing decisions, demand for convenience is reshaping meat consumption patterns, sustainability is gaining awareness but little influence
- Companies can explore potential white spaces for establishing competitive advantage. Companies can consider how they might shape the go-to-market strategy and product portfolio to meet consumers’ demand for convenience. Finally, companies may find attractive opportunities in tailoring value propositions to consumer concerns about health and sustainability.
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Topics: Global Meat Market, China, Consumer
Strategy & Business Model Section
New Threats to the Subscription Model
By Oded Koenigsberg | MIT Sloan Management Review | February 09, 2023
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Subscriptions have all the hallmarks of a can’t-miss revenue model. Customers love how they lower their barriers to access, while companies embrace their simplicity and ease of communication. Investors prize them because they generate more predictable long-term revenue flows than conventional one-off transaction models.
Two unanticipated risks, however, currently threaten to undermine these vendor advantages as well as the premise that subscriptions offer a better customer experience. These risks are supply chain disruption and inflation, the two most persistent causes of economic uncertainty over the past two years. Their combined effects are confronting many managers of subscription-based businesses with a challenge that never seriously crossed their minds during the relative stability of the 2010s. Can we still afford to meet the obligations we’ve made to our customers?
Supply chain disruptions — such as delayed shipment of inputs and finished goods mean that what a company promises its subscribers today might no longer be available at the same level of quality next week or next month. This creates the potential for dissatisfied customers, exacerbating a more fundamental risk in the subscription model: the ease with which customers can cancel. The same low barriers to entry that make subscriptions accessible also make them easily interchangeable.
The threat of inflation, meanwhile, is particularly acute for companies with a large base of long-term subscribers or for companies that deliver physical products under a subscription plan. Inflation squeezes margins because costs are rising, but the amount of revenue that companies earn from each customer remains constant until customers renew.
Supply chain disruption and inflation create a perfect storm that can reduce customer satisfaction and prompt customers to seek alternatives. Companies that derive the bulk of their revenue from subscriptions need to assess their risk profile with respect to supply chain reliability, cost structure, inflation, and customer retention. Depending on that risk assessment, such companies may need to consider alternative revenue models that supplement or even replace subscriptions.
Unless companies have established exit barriers through superior performance, upgrades, or attractive cross-selling, they face the risk of easy churn. There are both short- and longer-term solutions that managers can explore. In the short term, one solution is to incentivize customers to consume less at constant prices. In the short to medium term, companies can start to explore supplementary revenue models. The longer-term option for companies is to revisit and rethink the choice of a subscription revenue model strategically.
3 key takeaways from the article
- Subscriptions have all the hallmarks of a can’t-miss revenue model. Customers, companies, and investors love this model for their own reasons.
- Two unanticipated risks i.e., supply chain disruption and inflation, however, currently threaten to undermine the subscription model. Their combined effects are confronting many managers with a challenge that never seriously crossed their minds during the relative stability of the 2010s.
- There are both short- and longer-term solutions that managers can explore. In the short term, one solution is to incentivize customers to consume less at constant prices. In the short to medium term, companies can start to explore supplementary revenue models. The longer-term option for companies is to revisit and rethink the choice of a subscription revenue model strategically.
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Topics: Business Model, Strategy, Technology, Marketing, Subscription-based revenue
Leading & Managing Section
Mastering the Art of Strategic Apology
By Chip Bell | Forbes Magazine | February 14, 2023
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Southwest Airlines CEO Bob Jordan apologized for over 15,000 canceled flights over the winter holidays. “I am extremely sorry. There’s just no way to apologize enough. …The storm had an impact, but we had impacts beyond the storm,” Jordan said in a letter. Despite the airline’s stellar record in customer service, the jury is still out on the effectiveness of his recovery response, even after giving each impacted Southwest passenger 25,000 frequent flyer points. But Southwest did a lot correct in their attempt to regain betrayed passenger trust.
So, what makes for great service recovery? Conventional wisdom is that if the top leader offers emotional gravel and some atonement for corporate sins, all will be forgiven, or at least mollified. But the art of strategy apology is more complicated than “I am really, really sorry; here’s 10% off your next purchase.”
Customer Experience as a Partnership. Service is about a co-creation partnership. All successful partnerships require exceptional communication. The foundation of remarkable recovery is how communication heals a broken partnership. And the strategy is not limited to the customers’ front-line encounters; it includes communication from a mahogany row. The four key ingredients needed to turn an oops into an opportunity are:
- Humility: Healing begins with an expression of authentic concern.
- Empathy: Healing includes words and actions that let your partner know you understand and identify with their pain, plight, and predicament.
- Agiligy: Healing communication includes agility—words and actions that signal to customers they are dealing with someone who can quickly correct their problem. Customers want “can do” competence, attentive urgency, and an “I’ll turn this around” attitude. It sometimes includes involving customers in a joint search for a mutually satisfactory solution. Practicing the “people will care if they share” philosophy can increase a customer’s commitment to the outcome and bolster the very best of partnering.
- Loyalty: Healing communication includes showing visible loyalty to customers—the after-the-fact experiences that say, “We will not abandon you now that we have regained your allegiance.” It is the opposite of taking customers for granted. It includes continuous care and frequent follow-up. It gestures to the customer that loyalty is always a two-way street in any effective partnership.
3 key takeaways from the article
- What makes for great service recovery? Conventional wisdom is that if the top leader offers emotional gravel and some atonement for corporate sins, all will be forgiven, or at least mollified. But the art of strategy apology is more complicated than “I am really, really sorry; here’s 10% off your next purchase.”
- Service is about a co-creation partnership. All successful partnerships require exceptional communication. The foundation of remarkable recovery is how communication heals a broken partnership. And the strategy is not limited to the customers’ front-line encounters; it includes communication from a mahogany row.
- The four key ingredients needed to turn an oops into an opportunity are humility, empathy, agility, and loyalty.
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Topics: Marketing Strategy, Service Recovery, Communication
5 Effective Ways to Establish Yourself as a Thought Leader
By Omri Hurwitz | Entrepreneur Magazine | February 14, 2023
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Thought leadership is about being a subject matter expert and providing valuable content that helps your audience make informed decisions, solve problems or stay up to date with the latest trends in your industry. What’s more, it’s not about promoting yourself or your brand but about providing valuable and relevant information to your following. Five ways to practice effective thought leadership are:
- Create byline articles. Be a contributor in leading publications: Writing byline articles for leading publications in your industry is a great way to establish yourself as a thought leader. It allows you to leverage the existing established audience from big media companies and be recognized as a reliable authority in your field. You can also see the possibility to start your newsletter, publish articles on linkedIn, start your on substack, or write on your own company blog.
- Provide commentary. Constantly look for quote opportunities. This could be through reporters. And you can also consider posting daily on LinkedIn and Twitter about your industry’s latest trends.
- Do interviews. One of the most common practices is doing podcast outreach, which has become a popular medium for thought leaders to share their insights and expertise. You can reach out to relevant podcasters, offer to be a guest on their show and connect to their network of listeners. Moreover, you can also turn the table by creating your own podcast and interviewing industry leaders. This will allow you to have full control over the content and have a platform to reach your audience more consistently and directly.
- Attend events. Participating in events as a host, guest, speaker or spectator is an effective way to build your network, establish your connections and display your prowess in your given field. Organizing keynote talks at relevant occasions is a great way to showcase your expertise, motivate aspiring entrepreneurs and share your bag of tricks with your peers.
- Build a network of masterminds. Lastly, build a network for masterminds by organizing a group chat on WhatsApp or Telegram with other thought leaders in your field. This allows you to share ideas, ask questions and gain insights from other experts in your industry. Keep in mind that the world of business and tech is a tight-knit community, and it’s paramount to utilize every platform to create ties and relationships — you’re only as good as the people you surround yourself with.
3 key takeaways from the article
- Thought leadership is about being a subject matter expert and providing valuable content that helps your audience make informed decisions, solve problems or stay up to date with the latest trends in your industry. What’s more, it’s not about promoting yourself or your brand but about providing valuable and relevant information to your following. Being a thought leader is all about consistently connecting with your target audience. It’s a daily habit of the big players in any industry, and they make sure they’re always ahead of the game.
- It takes time and effort to establish yourself as a thought leader and build trust and credibility with your audience.
- Five ways to practice effective thought leadership are: create byline articles, provide commentary, do interviews, attend events, and build a network of masterminds.
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Topics: Entrepreneurship, Leadership, Marketing, Personal BrandingCommunication
Entrepreneurship Section
Planning Your Next Business? Here’s What the Founder of 3 Fast-Growing Companies Says You Should Do
By Ben Sherry | Inc Magazine | February 9, 2023
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For most entrepreneurs, founding three fast-growing companies would be like finding the holy grail and then finding it two more times. For Paul Lewis, being a serial entrepreneur feels more like a “disease.” The three-time founder compares his penchant for pursuing new business ideas to an affliction that can’t be cured. Here are three of Lewis’s tips for building a fast-growing company.
- When in doubt, aim high. While in college, Lewis noticed that a local video rental store was keeping track of rentals using index cards. Having just designed an application for a computer science class that, with a few changes, could be used to more effectively keep track of which customers had rented which videos, Lewis skipped classes the next day, drove to the rental store, and showed the owner how much time he could save with his system. Impressed, the owner asked Lewis how much he wanted to sell him the application. Lewis hadn’t even considered that he could be paid for his work. His only goal had been to secure bragging rights on campus and maybe also secure a discount on his future rentals. “I needed to say something, so I arbitrarily decided on $300, but I was so nervous that what came out of my mouth was $3,000,” Lewis says. “Before I could correct myself, the owner said, ‘Sold.'” The experience taught Lewis an important lesson: If a potential customer asks you to name a price, aim high. If they’re really interested, the worst thing that can happen is they’ll respond with a counteroffer.
- Don’t start a business. Solve a problem. Starting a company doesn’t begin with a blank sheet of paper and a brainstorming session, according to Lewis. The starting point, he says, should always be identifying a problem that you know how to solve. “If you are present and engaged with your environment, you just start to notice things–little opportunities for improvement here and there,” he says. Once you’ve identified the problem, the next step, according to Lewis, is to workshop the solution. “Start asking people you trust what they think about your idea,” he says. “If they tell you it’s a great idea, chances are it’s been done before–or it’s just a terrible idea. When someone tells you, ‘I’m not totally sure I understand,’ or ‘I don’t get it,’ then you might be onto something truly new and different.”
- Always go all in on your business. One of Lewis’s mottoes about entrepreneurship is, “If you’re not all in, you’re not really in at all.” Simply stated, you’re not going to succeed through half-measures. To build a successful business, you have to go all in. Even if your next startup doesn’t take off, that doesn’t mean you should shut it down, according to Lewis. “Startups don’t go out of business,” he says. “Founders quit.”
2 key takeaways from the article
- For most entrepreneurs, founding three fast-growing companies would be like finding the holy grail and then finding it two more times. For Paul Lewis, being a serial entrepreneur feels more like a “disease.” The three-time founder compares his penchant for pursuing new business ideas to an affliction that can’t be cured.
- Lewis’s three tips for building a fast-growing company are: when in doubt, aim high; don’t start a business, solve a problem; and always go all in on your business instead of taking this as your side hustle.
(Copyright)
Topics: Entrepreneurship, Startups, Decision-making
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