Extractive summaries of and key takeaways from the articles curated from TOP TEN BUSINESS MAGAZINES to promote informed business decision-making | Week 284 |February 17-23, 2023
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Shaping Section : Ideas and forces shaping economies and industries
Inflation will be harder to bring down than markets think
The Economist | February 16, 2023
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Given how woefully stock and bond portfolios have performed over the past year or so, you may not have noticed that financial markets are floating high on optimism. Yet there is no other way to describe today’s investors, who since the autumn have increasingly bet that inflation, the world economy’s biggest problem, will fall away without much fuss. The result, many think, will be cuts in interest rates towards the end of 2023, which will help the world’s major economies—and most importantly America—avoid a recession. Investors are pricing stocks for a Goldilocks economy in which companies’ profits grow healthily while the cost of capital falls.
In anticipation of this welcome turn of events the S&P 500 index of American stocks has risen by nearly 8% since the start of the year. It is not just American markets that have jumped. European stocks have risen even more, thanks partly to a warm winter that has curbed energy prices. Money has poured into emerging economies, which are enjoying the twin blessings of China abandoning its zero-covid policy and a cheaper dollar, the result of expectations of looser monetary policy in America. This is a rosy picture. Unfortunately it is probably misguided. The world’s battle with inflation is far from over. And that means markets could be in for a nasty correction.
Yet fluctuations in headline inflation often mask the underlying trend. Look into the details, and it is easy to see that the inflation problem is not fixed. America’s “core” prices, which exclude volatile food and energy, grew at an annualised pace of 4.6% over the past three months, and have started gently accelerating. The main source of inflation is now the services sector, which is more exposed to labour costs. That should not be a surprise, given the strength of labour markets. Six of the g7 group of big rich countries enjoy an unemployment rate at or close to the lowest seen this century. They are keeping many economies on course for inflation that does not fall below 3-5% or so. That would be less scary than the experience of the past two years. But it would be a big problem for central bankers, who are judged against their targets. It would also blow a hole in investors’ optimistic vision.
Whatever happens next, market turbulence seems likely. It is far more likely, however, that high rates will hurt the economy. There is also the possibility that central banks, faced with a stubborn inflation problem, do not have the stomach to tolerate a recession.
3 key takeaways from the article
- Given how woefully stock and bond portfolios have performed over the past year or so, you may not have noticed that financial markets are floating high on optimism. Yet there is no other way to describe today’s investors, who since the autumn have increasingly bet that inflation, the world economy’s biggest problem, will fall away without much fuss.
- This is a rosy picture. Unfortunately it is probably misguided. The world’s battle with inflation is far from over. And that means markets could be in for a nasty correction.
- Whatever happens next, market turbulence seems likely. It is far more likely, however, that high rates will hurt the economy. There is also the possibility that central banks, faced with a stubborn inflation problem, do not have the stomach to tolerate a recession.
(Copyright)
Topics: Global Economy, Recession, Inflation
Global Economics Intelligence executive summary, January 2023
McKinsey & Company | February 13, 2023
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Despite the year’s high inflation and energy uncertainty, world economic performance in 2022 almost certainly exceeded earlier, more pessimistic expectations. Growth estimates for 2023 and 2024 have also become less dire. Recently upgraded forecasts suggest that the pace of global GDP growth in 2022 was 3.2% (International Monetary Fund, Conference Board). In most analyses, a slowdown of short duration is predicted for 2023, resulting mainly from stagnation in the developed economies, with a rebound in 2024.
The economies of the United States and the eurozone demonstrated resilience in the second half of the year. The US economy expanded at an estimated 2.9% in the fourth quarter and 2.1% in 2022 overall. The eurozone economy avoided a predicted contraction in the fourth quarter, expanding by 0.1% beyond the previous quarter and 3.5% for the year.
From the world’s largest emerging economies, comparatively robust growth is expected for 2023. In India, where GDP expanded 8.7% in fiscal year 2021–22 (March to April), the official GDP growth estimate for fiscal year 2022–23 is 7%. In China, the pace of economic expansion slowed from 8.4% in 2021 to 3% in 2022. The main cause was disruption connected to the “zero-COVID” policy, but weaker global demand and rising geopolitical uncertainty magnified the headwinds.
Recent global economic data have been mixed, reflecting both improved conditions and persisting downside risks, largely centering on inflation and geopolitical uncertainty. Inflation has begun to slow in both developed and emerging economies. Energy prices have come down, but core inflation readings remain high, and central banks are sustaining a course of policy tightening.
Consumer confidence improved globally and in most surveyed economies, though the prevailing surveyed mood falls well short of optimism. High prices and consumer caution continue to constrain retail sales in surveyed economies. Amid weaker demand and high input costs, the global purchasing managers’ indexes (PMIs) for both manufacturing and services finished the year in shallow contraction. In November, world trade volumes, as measured by the CPB World Trade Monitor, decreased –2.5% from the previous month (when trade also contracted), with lower volumes in all major regions. Unemployment rates in most surveyed economies remain stable and relatively low by country or region. While producer price indexes have been going down, prices of some commodities, notably industrial and precious metals, have lately increased.
3 key takeaways from the article
- Despite the year’s high inflation and energy uncertainty, world economic performance in 2022 almost certainly exceeded earlier, more pessimistic expectations. Growth estimates for 2023 and 2024 have also become less dire. Recently upgraded forecasts suggest that the pace of global GDP growth in 2022 was 3.2%.
- Recent global economic data have been mixed, reflecting both improved conditions and persisting downside risks, largely centering on inflation and geopolitical uncertainty. Inflation has begun to slow in both developed and emerging economies. Energy prices have come down, but core inflation readings remain high, and central banks are sustaining a course of policy tightening.
- From the world’s largest emerging economies, comparatively robust growth is expected for 2023.
(Copyright)
Topics: Global Economy, Inflation, Growth
How did China come to dominate the world of electric cars?
By Zeyi Yang | MIT Technology Review | February 21, 2022
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Before most people could realize the extent of what was happening, China became a world leader in making and buying EVs. And the momentum hasn’t slowed: In just the past two years, the number of EVs sold annually in the country grew from 1.3 million to a whopping 6.8 million, making 2022 the eighth consecutive year in which China was the world’s largest market for EVs. For comparison, the US only sold about 800,000 EVs in 2022.
The industry is growing at a speed that has surprised even the most experienced observers: This dominance in the EV sector has not only given China’s auto industry sustained growth during the pandemic but boosted China in its quest to become one of the world’s leaders in climate policy.
How exactly did China manage to pull this off? Several experts tell MIT Technology Review that the government has long played an important role—propping up both the supply of EVs and the demand for them. As a result of generous government subsidies, tax breaks, procurement contracts, and other policy incentives, a slew of homegrown EV brands have emerged and continued to optimize new technologies so they can meet the real-life needs of Chinese consumers. This in turn has cultivated a large group of young car buyers. But the story of how the sector got here is about more than just Chinese state policy; it also includes Tesla, Chinese battery tech researchers, and consumers across the rest of Asia.
China realized that they would never overtake the US, German, and Japanese legacy automakers on internal-combustion engine innovation and on hybrid vehicles, whose batteries in the early years served a secondary role relative to the gas engine, was already being led by countries like Japan, meaning China also couldn’t really compete there either. This pushed the Chinese government to break away from the established technology and invest in completely new territory: cars powered entirely by batteries. Plus, for China, EVs also had the potential to solve several other major problems, like curbing its severe air pollution, reducing its reliance on imported oil, and helping to rebuild the economy after the 2008 financial crisis. It seemed like a win-win for Beijing.
In 2022, China exported 679,000 EVs, a 120% increase from the year before. There’s little reason to doubt the numbers will only grow from here.
2 key takeaways from the article
- Before most people could realize the extent of what was happening, China became a world leader in making and buying EVs. And the momentum hasn’t slowed: In just the past two years, the number of EVs sold annually in the country grew from 1.3 million to a whopping 6.8 million. For comparison, the US only sold about 800,000 EVs in 2022.
- As a result of generous government subsidies, tax breaks, procurement contracts, and other policy incentives, a slew of homegrown EV brands have emerged and continued to optimize new technologies so they can meet the real-life needs of Chinese consumers. This in turn has cultivated a large group of young car buyers. Tesla, Chinese battery tech researchers, and consumers across the rest of Asia also contributed towards the creation of this giant.
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Topics: Technology, Electric Vehicles, China
Strategy & Business Model Section
How to Build a Company in an Overly Saturated Market
By Hillel Fuld | Inc Magazine | February 13, 2023
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How to penetrate a market that is extremely saturated? Five things you can do to stand a chance when entering a market like search engines or social media.
- Know your competitors. Let’s go back to the basics. In your mind, what is a competitor? I will tell you what it’s not. A competitor is not just a company doing exactly what you’re doing. So even if you’re building a social platform for potato lovers, the thought that Meta is not a competitor is silly and detrimental. Any company targeting the same audience as you, with a similar value proposition, is your competitor. So even though Meta is not a social platform for potato lovers, don’t forget that those potato lovers are now building their community on Facebook. That means you need to take them off of Facebook and bring them to your platform, which means that Facebook is a competitor. Without the knowledge and recognition of your competitive landscape, your chances of success are close to zero.
- Figure out your competitive advantage. Saying you are going to out-execute your competition is a legitimate answer when asked by an investor how you could possibly even touch such a saturated market. Let’s not forget that Google wasn’t first, Facebook wasn’t first, and even Apple wasn’t first. All they did was out-execute Yahoo, MySpace, and Nokia. Having said that, saying to an investor that you will beat Meta at its own game has to be backed up with a very detailed explanation of how. Don’t forget, some of these companies have hit a level of scale we’ve never seen in history.
- You can’t win on one feature. This is a true story, as hard as it might be to believe. About a decade ago, the author met a young entrepreneur who told him he was building a photo-sharing app. The writer immediately asked him if he really intends on competing with Instagram. He replied that Instagram is not a competitor because he has this one filter that Instagram doesn’t. He genuinely thought he’d beat Instagram on that one feature. We all understand how silly that is. You need more than a feature to differentiate yourself.
- Become a “must-have”. Oftentimes, entrepreneurs try building a really cool product, a solution to a nonexistent problem. Focus on the problem, not your solution. If there is a real pain point that is not being addressed, solve that problem. If you are truly offering a solution to a problem that many people have, you have a good chance of attracting users who will help you eventually achieve critical mass.
- Be stubborn. Like it or not, chances are you’re going to have to eventually raise money for your startup. The first thing any investor will ask you is, “Are you nuts? You have to be to think you can compete with Google.” There is really only one very strong answer besides the one mentioned above. “Many people have tried to cure cancer. Does that mean I shouldn’t try?” If you are indeed solving a real problem that is not addressed by the Googles of your market, then any investor will appreciate that answer.
3 key takeaways from the article
- How to penetrate a market that is extremely saturated?
- Five things you can do to stand a chance when entering a market like search engines or social media: know your competitors, figure out your competitive advantage, you can’t win on one feature, become a “must-have”, and be stubborn.
- Penetrating a highly saturated market is far from easy, but so is entrepreneurship in general.
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Topics: Business Strategy, Decision Making, Business Model, Saturated Market
Leading & Managing Section
You Need Two Leadership Gears
By Lindy Greer et al., | Harvard Business Review Magazine | March-April 2023
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Do the best leaders take charge, lead from the front, give orders, and push people to do great work? Or do they listen to them, empower them, and get out of the way? The most effective leaders, the authors research shows, routinely shift between those two approaches to meet the demands of the moment. Once you understand how and where to shift power modes, you can increase your ability to do it by taking these four steps:
- Revisit Your Mindset: Many leaders hold flawed beliefs about power that prevent them from alternating between exercising and delegating authority. To escape that trap question the assumption that hierarchy is fixed, and recognize that sharing power doesn’t diminish your authority.
- Analyze Yourself and Your Team. Leaders and teams often don’t even realize that they’re trapped in one power mode. That’s why being aware of your own tendencies and making your team members aware of theirs is crucial. How to do it: Study your habits for instance talking too much in meetings where everyone is supposed to contribute ideas. it’s also good to actively seek feedback from people close to you, and study your team’s norms.
- Set Expectations. Skilled leaders aren’t coy or subtle about when to operate in one power mode or the other. They send crystal clear signals about the modes people will work in before meetings, programs, tours, or other gatherings. Spell out shifts in expectations about debate or decision in agendas, or differentiate meetings based on purpose, use rituals to mark transitions, and avoid sham flattening.
- Reinforce Shifts with Words and Deeds. Like hippo leaders have to know when to rise out of the water and exercise their power and when to cede it to others and sink down, leaving just their eyes above the surface to discreetly watch their teams. But to do that effectively, leaders must be mindful of the words they choose, their body language, and how or whether they participate in particular meetings. For this lead by example; announce shifts in modes, using simple, clear language and maybe even raising your voice a bit; use body language; read the room; or leave the room iIf you’re the most powerful person in the room your mere presence can be intimidating.
3 key takeaways from the article
- Do the best leaders take charge, lead from the front, give orders, and push people to do great work? Or do they listen to them, empower them, and get out of the way?
- The most effective leaders routinely shift between those two approaches to meet the demands of the moment.
- Once you understand how and where to shift power modes, you can increase your ability to do it by taking these four steps: Revisit Your Mindset to become sensitive about flawed beliefs about power, Analyze Yourself and Your Team to ensure that. Leaders and teams don’t trapped in one power mode, Set Expectations about when to operate in one power mode or the other, and Reinforce Shifts with Words and Deeds.
(Copyright)
Topics: Leadership, Teams, Decision-making
How to Engage Skeptics in Culture Interventions
By Amy C. Edmondson and Per Hugander | MIT Sloan Management Review | February 14, 2023
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Many executive team members struggle to engage in the problem-solving and strategic decision-making needed in a complex environment. One reason for this is a lack of the psychological safety that makes it possible to offer new information or dissenting views, which directly affects decision quality. An obvious solution is to work on building psychological safety in the team; however,some executives are skeptical about what they see as “soft” concepts or interventions. Even when most of a group is on board, reluctant individuals — especially those in positions of power — can substantially inhibit psychological safety and, in turn, performance. Fortunately, introducing perspective taking as a skill offers an alternative way to engage skeptics and has been shown to drive performance in diverse teams.
Perspective describes how an individual perceives their reality or a specific issue. Our perspective on any matter develops through the accumulated experiences of life — such as education, upbringing, and social context — and past experiences dealing with similar topics. In the workplace, our unique role, affiliation, and hierarchical position shape our perception of a topic, opportunity, or challenge. Teams of people with different backgrounds, diverse experiences, and multiple competencies will have a wider variety of perspectives than more homogeneous groups.
Long known as a crucial skill for innovation and negotiations, perspective taking occurs when an individual actively attempts to step outside their own perspective to envision another person’s viewpoint, motivation, and emotions. The power of perspective taking is that its approach of curious inquiry asks people to do the mental work of imagining another’s viewpoint.
Perspective taking serves as an effective way to engage and influence leaders and executives who may otherwise be turned off by what they consider “soft” concepts. Additionally, the intervention rendered long-term effects on culture as leaders developed a shared assumption that perspective taking is helpful when dealing with complex challenges.
Perspective taking, then, offers skeptics — along with everyone else — a way to engage, enabling a climate where candid, accurate, useful information can be shared in a goal-oriented way, ultimately fostering effective problem-solving.
The question of where to begin in developing a climate of candor and challenge for effective executive decision-making will never have a one-size-fits-all answer. Overlooking these critical team competencies is no longer an option in an uncertain world, but whether you choose to work on psychological safety or introduce perspective taking as a critical team skill is up to you.
3 key takeaways from the article
- Many executive team members struggle to engage in the problem-solving and strategic decision-making needed in a complex environment. One reason for this is a lack of the psychological safety that makes it possible to offer new information or dissenting views, which directly affects decision quality.
- An obvious solution is to work on building psychological safety in the team; however,some executives are skeptical about what they see as “soft” concepts or interventions.
- Fortunately, introducing perspective taking as a skill offers an alternative way to engage skeptics and has been shown to drive performance in diverse teams. Perspective describes how an individual perceives their reality or a specific issue. The power of perspective taking is that its approach of curious inquiry asks people to do the mental work of imagining another’s viewpoint.
(Copyright)
Topics: Decision-making, Problem-Solving, Teams
Do You Want To Know The Best-Kept Secret To Improving Wellbeing?
Colleen Reilly | Forbes Magazine | February 21, 2023
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An example of a life solution could be doing things that improve your mind, body, and spirit, such as volunteering. Volunteering creates a trifecta of great outcomes for you and others. Research reveals that volunteering can increase positive feelings, also referred to as the helper’s high, instill greater trust in others, increase social interaction, and increase the health and happiness of individuals who commit to volunteering.
What is holding us back from serving others? Skip phone scrolling, Waiting for the perfect conditions, I’ll volunteer when I have extra time, fear of the unknown, leaders make it mandatory, I don’t feel like I make a difference, I won’t make a dent in the problem, don’t know where to start, It did not meet my expectations.
How can you increase engagement? First of all, giving yourself a break from technology is always important. When are the conditions ever perfect? You don’t have extra time, you make extra time. Evidence tells us that more frequent and regular volunteering – such as weekly – is better for volunteers than being involved just a few times a year, often that becomes too intense for the volunteer, and the benefits start to wane. Your social impact is given by: The number of people whose lives you improve, and how much you improve them over time. This means you can increase your social impact in three ways: by helping more people, by helping the same number of people to a greater extent, or by getting future generations to volunteer at a much younger age.
Five Simple Steps to start a Volunteer Program at Work are: educate leadership about the positive results of volunteering; include leaders, employees, customers, suppliers, and board members in the volunteer work to signal that this is important; provide appropriate funding, participation, support, and recognition consistently; align the company’s values and strengths with volunteering opportunities to build the most meaning for participants and recipients; and measurement of volunteer value, community reach, and volunteerism impact on employees and recipients.
3 key takeaways from the article
- An example of a life solution could be doing things that improve your mind, body, and spirit, such as volunteering. Volunteering creates a trifecta of great outcomes for you and others.
- Research reveals that volunteering can increase positive feelings, also referred to as the helper’s high, instill greater trust in others, increase social interaction, and increase the health and happiness of individuals who commit to volunteering.
- Five Simple Steps to start a Volunteer Program at Work are: educate leadership about the positive results of volunteering; include leaders, employees, customers, suppliers, and board members in the volunteer work to signal that this is important; provide appropriate funding, participation, support, and recognition consistently; align the company’s values and strengths with volunteering opportunities to build the most meaning for participants and recipients; and measurement of volunteer value, community reach, and volunteerism impact on employees and recipients.
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Topics: Volunteering, Personal Development, Society
Entrepreneurship Section
5 Marketing Tips for Brand Success
By Adam Chandler | Entrepreneur Magazine | February 21, 2023
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Digital marketing isn’t a set-and-forget strategy. New marketing trends, technology and evolving consumer and market demands keep digital marketing in a constant state of metamorphosis. If the last decade has shown us anything, the digital landscape is ever-changing, and to be on the ball, you need to be ahead of your competitors. To help you align your brand marketing to future changes and stay ahead of the curve, the 2023 trends that’ll most impact digital marketing are:
- Social media influencer marketing. According to research by Edelman, only one in three consumers say they can trust most of the brands they buy from. So. in response, many brands are partnering with influencers to help them cultivate strong brand awareness, recognition and trust.
- Marketing automation. Every marketing campaign has many repetitive functions that can be automated with the right tools. These are everyday processes such as project assignments, social media posting, new project requests, messaging, email marketing, task reminders and workflow status updates. These recurrent marketing tasks can eat into your productive time, preventing you from completing other, more productive functions like creating fresh marketing content or analyzing key insights from your marketing data. Automation tools are particularly crucial today, seeing the greater part of marketing is data-driven.
- Generative artificial intelligence (AI) in content creation. While content automation tools are unlikely to eliminate the need for human content creators, they make content curation, creativity and predictive marketing much easier. You may not have the resources to immediately roll out sophisticated automation tools like GPT-3 in 2023 because they’re costly to acquire and train. Still, you can use more affordable tools like Marketmuse or Article Forge to assist you in meeting your content creation aims.
- Video marketing. Video marketing has been one of the top marketing strategies for years. However, video production and delivery advancements have steadily increased its importance, as well as transformed the best practices for video advertising. Some of the video marketing trends you should cash in on in 2023 include: search-optimized video, live video, virtual and augmented reality, vlogs and social media stories, silent videos, smartphone production.
- Mobile-first marketing. Mobile devices made up 58.99% of global website traffic in the 2nd quarter of 2022. An even larger percentage of web traffic will likely come from mobile in 2023 and beyond. Pay more attention to mobile-first marketing in your digital marketing approach to take advantage of this trend.
3 key takeaways from the article
- Digital marketing isn’t a set-and-forget strategy. New marketing trends, technology and evolving consumer and market demands keep digital marketing in a constant state of metamorphosis.
- If the last decade has shown us anything, the digital landscape is ever-changing, and to be on the ball, you need to be ahead of your competitors.
- To help you align your brand marketing to future changes and stay ahead of the curve, the 2023 trends that’ll most impact digital marketing are: partnering with social influencers to help the organizations cultivate strong brand awareness, recognition and trust; use marketing automation for a campaign repetitive functions, use generative artificial intelligence (AI) in content creation; use video marketing; and employ mobile-first marketing.
(Copyright)
Topics: Marketing, Social Media Marketing
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