Weekly Business Insights from Top Ten Business Magazines – Week 285

Extractive summaries of and key takeaways from the articles curated from TOP TEN BUSINESS MAGAZINES to promote informed business decision-making | Week 285 |February 24-March 2, 2023

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Shaping Section : Ideas and forces shaping economies and industries

Global firms are eyeing Asian alternatives to Chinese manufacturing

The Economist | February 20, 2023

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In 1987 panasonic made an adventurous bet on China by entering a Chinese joint venture to make cathode-ray tubes for its televisions in Beijing. Three and a half decades on, China is the linchpin of the multitrillion-dollar consumer-electronics industry. Its exports of electronic goods and components amounted to $1trn in 2021, out of a global total of $3.3trn.

Increasingly, however, under a weighty combination of commercial and political pressure, foreign companies are beginning to pluck up the courage if not to leave China entirely, then at least to look beyond it for growth. Chinese labour is no longer that cheap: between 2013 and 2022 manufacturing wages doubled, to an average of $8.27 per hour. More important, the deepening Sino-American techno-decoupling is forcing manufacturers of high-tech products, especially those involving advanced semiconductors, to rethink their reliance on China.

Between 2020 and 2022 the number of Japanese companies operating in China fell from around 13,600 to 12,700.  Samsung, a South Korean firm, has slashed its Chinese workforce by more than two-thirds since a peak in 2013. Dell, an American computer-maker, is reportedly aiming to stop using Chinese-made chips by 2024.

The question for Dell, Samsung, Sony and their peers is: where to make stuff instead? No single country offers China’s vast manufacturing base. Yet taken together, a patchwork of economies across Asia presents a formidable alternative. It stretches in a crescent from Hokkaido, in northern Japan, through South Korea, Taiwan, the Philippines, Indonesia, Singapore, Malaysia, Thailand, Vietnam, Cambodia and Bangladesh, all the way to Gujarat, in north-western India. On paper, this is an opportunity for a useful division of labour, with some countries making sophisticated components and others assembling them into finished gadgets. Whether it can work in practice is a big test of the nascent geopolitical order.

This alternative Asian supply chain—call it Altasia—looks evenly matched with China in heft, or better.  Altasia has also become more economically integrated. Hopes linge on the Regional Comprehensive Economic Partnership, Indo-Pacific Economic Framework, and  Comprehensive and Progressive Agreement for Trans-Pacific Partnership – the transatlantic trade agreements.

China’s huge advantage has historically been its vast single market, knit together with decent infrastructure, where value could be added without suppliers, workers and capital crossing national borders. For Altasia to truly rival China, therefore, its supply chain will need to become far more integrated and efficient. Although RECP has greased the wheels of intra-Altasian commerce somewhat, the flow of goods faces more obstacles than it does within China. Its member countries will need to play to their comparative advantage.

3 key takeaways from the article 

1. In 1987 panasonic made an adventurous bet on China by entering a Chinese joint venture to make cathode-ray tubes for its televisions in Beijing. Three and a half decades on, China is the linchpin of the multitrillion-dollar consumer-electronics industry. Its exports of electronic goods and components amounted to $1trn in 2021, out of a global total of $3.3trn.
2. Increasingly, however, under a weighty combination of commercial and political pressure, foreign companies are beginning to pluck up the courage if not to leave China entirely, then at least to look beyond it for growth.  Option is Altasia – countries include Japan, South Korea, Taiwan, the Philippines, Indonesia, Singapore, Malaysia, Thailand, Vietnam, Cambodia, Bangladesh, and India.
3. Altasia will certainly not replace China soon, let alone overnight. But in time China is likely to become less attractive to foreign manufacturers. 

Full Article

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Topics:  Global Economy, Global Supply Chain, China, Foreign Direct Investment

After Multibillion-Dollar Fintech Binge, Wall Street Has a Writedown Hangover

By Paige Smith | Bloomberg Businessweek | February 23, 2023

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Over the past few years, venture capitalists and Wall Street giants paid eye-popping prices for companies that promised new ways to bank, borrow or buy insurance. In 2021, global spending on these so-called fintechs reached a fever pitch at $139.8 billion, almost triple the previous year’s level, according to researcher CB Insights.  But in 2022 that money dried up as a broader bear market took hold. And with fintech valuations falling precipitously, some big players are admitting they paid too much.

Take Prudential Financial Inc.’s foray into “insuretech.” In 2019 it paid $2.35 billion for Assurance IQ, a digital newcomer that was less than five years old. Assurance offered Prudential an online platform to sell life, health, Medicare and auto coverage.  But the unit failed to turn a profit until the most recent quarter, and Prudential has written off almost $2 billion of its as a loss.  In other cases some ideas may not have been as innovative as they first appeared. JPMorgan Chase & Co.’s purchase of college financial-planning website Frank for $175 million in 2021 turned out to be worse than just a disappointing acquisition—the bank alleges it was a victim of fraud.

Last year brought an abrupt adjustment for fintech, much as it did for tech icons such as Amazon.com, Meta Platforms and Netflix. The early stage of the pandemic was a boon for online businesses as consumers spent oodles of time on the couch—and online—and often had plenty of purchasing power. Then when restrictions loosened, the economy started sliding back to normal; business might still be good, but it didn’t always meet investors’ fervid expectations.

Fintech’s valuations didn’t get any help from Washington regulators, who’ve issued a series of warnings and new rules that could curb growth of the new ventures. The US Office of the Comptroller of the Currency, for example, has issued guidelines saying it may levy bigger fines against small banks if their fintech partners hurt a lot of consumers, and it set up a dedicated office to monitor the sector.

According to few of the financial analysts this is a typical corporate story of boom and bust.  Others believe that doesn’t mean fintech’s over.

3 key takeaways from the article

1. Over the past few years, venture capitalists and Wall Street giants paid eye-popping prices for companies that promised new ways to bank, borrow or buy insurance. In 2021, global spending on these so-called fintechs reached a fever pitch at $139.8 billion, almost triple the previous year’s level.  But in 2022 that money dried up as a broader bear market took hold. And with fintech valuations falling precipitously, some big players are admitting they paid too much.
2. Fintechs startups inability to to turn a profit, some ideas may not have been as innovative as they first appeared, and post COVID purchase behaivor of the customers are among the chief reasons.
3. According to few of the financial analysts this is a typical corporate story of boom and bust.  Others believe that doesn’t mean fintech’s over.

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Topics:  Fintech, Marketing, Payments

Agtech: Breaking down the farmer adoption dilemma

By David Fiocco | McKinsey & Company | February 7, 2023

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External capital has been pouring into the upstream agriculture food-technology industry to the tune of about $18.2 billion in 2021.  This influx of capital has brought with it a plethora of technological solutions to the agriculture space. Over the past decade, the number of farmer-facing agtech start-ups has ballooned. Farmers can now harness software, hardware, and service-based solutions that promise to increase efficiency, ease pain points, and lower their environmental footprint.

To gain a deeper understanding of how agtech usage may differ across regions globally, and what barriers may be impeding broader adoption, McKinsey surveyed 5,500 row- and specialty-crop farmers in 2022 across Asia, Europe, North America, and South America. Farmers’ responses reveal that agtech adoption varies markedly across geographies, and that hesitant adopters are particularly wary of unclear ROI and high prices. Other major findings are:

1. European and North American farmers lead global agtech adoption, with about 61 percent currently using or planning to adopt one agtech product in the next two years. 
2. Agtech product adoption is lowest in Asia, with only about 9 percent of farmers using or planning to use at least one agtech product; adoption varies between countries in this region as well.
3. Looking at agtech submarkets, farm-management software has the highest adoption among farmers at 21 percent, followed closely by a 15 percent utilization of remote-sensing and precision agriculture hardware.

Five trends arise across six farmer-facing agtech submarkets.

1. Though agtech adoption is slow, farmers are open to innovation.
2. There is a transition toward more sustainable, less resource-intensive food systems, with precision agriculture as a key enabler.
3. Regulation will likely play an increasingly important role in accelerating growth in certain agtech submarkets.
4. Business models continue to evolve toward integrated solutions.
5. There is opportunity to improve product personalization and resolve the limited trust around data sharing.

The agtech space offers immense opportunities to stimulate farmer buy-in, but more work lies ahead to drive adoption. The authors identified four key areas:  personalizing products and business models; Making the customer journey easier; Renewing trust in data storage and sharing; and Integrating solutions versus amassing point-based solutions.

3 key takeaways from the article

1. With recent increases in on-farm profitability and strong investments over the last decade, there is a high openness to innovation, yet adoption is slow.
2. Five trends arise across six farmer-facing agtech submarkets are: though agtech adoption is slow, farmers are open to innovation; there is a transition toward more sustainable, less resource-intensive food systems, with precision agriculture as a key enabler; regulation will likely play an increasingly important role in accelerating growth in certain agtech submarkets; business models continue to evolve toward integrated solutions; and there is opportunity to improve product personalization and resolve the limited trust around data sharing.
3. Four key areas in which agtech space offers immense opportunities to stimulate farmer buy-in:  personalizing products and business models; Making the customer journey easier; Renewing trust in data storage and sharing; and Integrating solutions versus amassing point-based solutions.

Full Article

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Topics:  Agriculture, Technology, Farm Management

Strategy & Business Model Section

The Hybrid Start-Up

By Nathan Furr and Kate O’Keeffe | Harvard Business Review Magazine | March – April, 2023 Issue

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Compared with start-ups, established corporations have many resources and capabilities that ought to give them a substantial lead: products, customers, operations, licenses, distribution, marketing, and capital. But too often a couple of misfits with a laptop manage to steal a corporation’s lunch. Why? Because corporations lack one critical ability: the entrepreneurial muscle to take an idea from small to big, from zero to one. If its idea is radical enough and sound enough, a start-up can disrupt an incumbent’s value chain.

Leaders try to respond by creating their own corporate ventures, but those typically lack entrepreneurial qualities because they are staffed by people trapped inside the regime. Or they create an arm’s-length spinout to make space for innovativeness, but then the spinout struggles to access the very resources that would give it an advantage. Enter the hybrid start-up, which combines the assets of a corporation and the entrepreneurial capability of a start-up.  The analysis has shown that hybrid start-ups are two or three times as likely as independent start-ups to succeed.

The best way to get started, therefore, is to do some hard thinking about what you most want from your hybrid start-up and then match that with the right balance of freedom and integration. As a rule, greater integration with a corporation increases a start-up’s ability to access privileged assets, transform the core, or scale up. But it also slows the venture significantly, limits outside funding, and may distract from external opportunities. So if your primary goal is to use the corporation’s assets to spark new revenue streams, create a strategic complement, or disrupt your existing business, you should probably not integrate the start-up.  By contrast, if the primary goal is to transform the core, you need to keep the hybrid start-up more closely tethered to the organization.

Part of what makes a new venture a hybrid is that it integrates outsiders and insiders. The insiders help tap the parent company’s assets, provide bridges back to the core, transfer learning from the start-up, and give guidance on how to get things done. But they must be the right people, treated as equals with the outsiders (not as bosses), and willing to hunt with them as a united pack. 

Although the structure, leader, and team are important, the venture’s success depends equally on using entrepreneurial capabilities to discover a true unmet need and rapidly iterating on prototype solutions to create a sustainable service or product.  Ethnographic studies can help.  Its not the only product, scalability also matters.  Scalability also depends on defining the appropriate business model and creating integration with the core.

3 key takeaways from the article

1. Compared with start-ups, established corporations have many resources and capabilities that ought to give them a substantial lead: products, customers, operations, licenses, distribution, marketing, and capital. But too often a couple of misfits with a laptop manage to steal a corporation’s lunch. Why? Because corporations lack one critical ability: the entrepreneurial muscle to take an idea from small to big, from zero to one.
2. Leaders try to respond by creating their own corporate ventures, but those typically lack entrepreneurial qualities because they are staffed by people trapped inside the regime. Enter the hybrid start-up, which combines the assets of a corporation and the entrepreneurial capability of a start-up.  
3. The analysis has shown that hybrid start-ups are two or three times as likely as independent start-ups to succeed.

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Topics:  Entrepreneurship, Competitive Advantage, Strategy

How E-Commerce Companies Can Reduce Returns

By Pedro Amorim et., al., | MIT Sloan Management Review | March 01, 2023 

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Retail executives love the lack of friction in online shopping that makes it fast and easy for customers to complete a purchase, and promising free returns is part of that. But the costs of those returns add. It’s putting e-commerce executives under pressure to lower these unsustainable numbers.

The managers the authors work with on fulfillment strategies keep coming back to two less-obvious, intertwined questions regarding product returns: Does the current common strategy of putting the lion’s share of resources toward speedy delivery affect the return rate? And could a fulfillment approach that deprioritizes speed and instead aims to consolidate multiple-item orders into single, large deliveries improve return rates?

Analyzing customers’ return rates for the marketplace, the authors found that the company would benefit significantly if the items were delivered in consolidated shipments instead of split — even if some things were to arrive later. The estimates for the case study show that consolidating all split orders would have decreased the marketplace’s return rate by about 1 percentage point.

How can retailers start orchestrating their supply chains differently to ensure that delivery consolidation happens more often? The most straightforward suggestion is to enforce consolidation across the board. That would likely result in lower return rates and higher profitability.

However, such an approach requires that the retailer work with a fairly small portfolio of delivery companies to ensure that consolidation can happen without transferring stock between them — and that limits the price negotiation power that a larger portfolio of courier relationships can provide. That may be balanced out by unlocking additional savings in forward shipping costs, since each order, regardless of the parcels it produced, would result in just one customer delivery.  

The truth is that some customers will prefer speed over convenience. Therefore, a more nuanced approach is to let customers have a say in the consolidation decisions affecting their orders.   Other retailers may prefer to intervene in the supply chain dynamically and in real time to consolidate the delivery of each customer order in certain circumstances. 

This strategy would require the marketplace to track the parcels produced by each order and estimate their time of arrival at the consolidation point, where the order could be combined into a single shipment. Based on these estimates, the retailer would decide whether the delivery should be split or consolidated.

3 key takeaways from the article

1. Retail executives love the lack of friction in online shopping that makes it fast and easy for customers to complete a purchase, and promising free returns is part of that. But the costs of those returns add up. It’s putting e-commerce executives under pressure to lower these unsustainable numbers.
2. Analysis of the customers’ return rates for the marketplace suggests that the company would benefit significantly if the items were delivered in consolidated shipments instead of split — even if some things were to arrive later.
3. However, such an approach requires that the retailers work with a fairly small portfolio of delivery companies to ensure that consolidation can happen without transferring stock between them — and that limits the price negotiation power that a larger portfolio of courier relationships can provide.

Full Article

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Topics:  Strategy, Business Model, e-commerce

Leading & Managing Section

The leadership lessons Britain’s only blind female CEO learned from losing her sight in her 40s

By Orianna Rosa Royle | Fortune Magazine | March 2, 2023

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Sandi Wassmer was just 15 years old when she was told she’d be blind by 40. Now on the other side, she says that she’s “happier” and a better leader because of it.   “They told me I was going to go blind in my forties,” she revealed to Fortune. “I was just not emotionally mature enough to really understand what that meant – so I just put it into a box and sealed it.”  And put her diagnosis aside, she did. Despite being given the heads up decades prior, she felt ill-prepared – not so much on not being able to see, but more on how she would be seen. 

“I did not know how to cope with the label of disabled,” she said. “I did not know how to cope with how people suddenly started to look down on me, as I was a lesser human being.”  “Discriminative” encounter ignited a spark.  As a result, she started having to navigate discrimination – and so did her business.  She went on to shift Copious’ focus to more accessible and inclusive designs which soon became its USP before closing the business (despite turning over around $1 million) to seek more purpose-driven work in 2014. 

Wassmer swiftly learned that there were things she could no longer do as a leader, like reading emails. Still, that didn’t stop her from trying to tackle these tasks head-on.  “Now I just say, hey, can I borrow your eyes?” she says while adding, “you have to be in control of your dependencies because there’s no way you can do it all yourself.”  And there’s an art to delegating, without seemingly palming off work to your team.  But she maintains that she does it in a “supporting and nurturing way”, for example, by ensuring that “the instructions are clear and the strategy is clear. So that when they are delegated to, they have everything around them to be successful.”

Her experience of going blind, opened her eyes to the judgemental world that many other people with disabilities face and changed how she leads.  Before she says she would be the person she thought other people wanted her to be. “Now I’m just me.” “It makes me immensely flawed as a human being. But it makes me a much better leader,” she adds.  “Because I’m authentic, open and I listen, I get a sense of trust and loyalty that is above and beyond anything I’ve ever experienced before.”

3 key takeaways from the article

1. Sandi Wassmer was just 15 years old when she was told she’d be blind by 40. Now on the other side, she says that she’s “happier” and a better leader because of it.
2. Despite being given the heads up decades prior, she felt ill-prepared – not so much on not being able to see, but more on how she would be seen. 
3. Two important lessons are: Delegate in a “supporting and nurturing way”, for example, by ensuring that “the instructions are clear and the strategy is clear.  And instead of how other people wanted her to be “Now I’m just me.” “It makes me immensely flawed as a human being. But it makes me a much better leader,” she adds.  “Because I’m authentic, open and I listen, I get a sense of trust and loyalty.”

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Topics:  Leadership, Branding, Personal Development

How Your Business Can Support Earthquake Victims in Turkey and Syria

By Sarah Lynch | Inc Magazine | February 15, 2023

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A 7.8 magnitude earthquake hit Turkey and Syria on February 6, and the two countries continue to reel from its devastating impact, with more than 41,200 lives already lost. As rescue and recovery efforts continue, businesses big and small have an opportunity to provide crucial support.  Business leaders have a unique opportunity to use their position and company resources to help those affected. Here are a few ways your company can join the ongoing efforts.

1. Make and match donations.  Financial donations play a crucial role in humanitarian relief efforts, and matching charitable donations can be an effective way to boost contributions even further.
2. Donate proceeds from an event or service.  Instead of donating a lump sum, you can set up a daylong (or even monthlong) initiative and donate a portion of the proceeds to organizations providing humanitarian relief in Turkey and Syria. 
3. Donate critically needed supplies.  The millions of people displaced by the earthquake are in urgent need of essentials. 
4. Leverage your company’s strengths to provide support.  Money and supplies aren’t the only way to help survivors. Think about how your company’s particular strengths and services could provide relief to those affected by this crisis. 

2 key takeaways from the article

1. A 7.8 magnitude earthquake hit Turkey and Syria on February 6, and the two countries continue to reel from its devastating impact, with more than 41,200 lives already lost. As rescue and recovery efforts continue, businesses big and small have an opportunity to provide crucial support.  Business leaders have a unique opportunity to use their position and company resources to help those affected. 
2. Few ways your company can join the ongoing efforts are: make and match donations, donate proceeds from an event or service, donate critically needed supplies, and leverage your company’s strengths to provide support.

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Topics:  Leadership, Corporate Social Responsibility

Entrepreneurship Section

10 Common Pitfalls Entrepreneurs Should Watch Out For

By Keith Krach | Forbes Magazine | February 22, 2023

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Entrepreneurs can all relate to the fact that it is difficult to navigate uncharted territory in the business world. Putting yourself out there and taking on all the risks associated with launching a startup isn’t easy.  You’re only human, and you will make mistakes in the process of building your business—so don’t beat yourself up about it. However, it can be helpful to learn about the most common errors and misjudgments that other entrepreneurs have made, so you can avoid them.  Watch out in particular for the following missteps.

1. Misjudging the learning curve of a new industry.  Entrepreneurs often overestimate what they know about a new industry they’re entering—especially if they’ve founded other startups in related fields. However, aspects of business you may have thought were universal and can prove to be particular to an industry, and not relevant or accurate in your new field. Stay humble and be open to learning from those who are more experienced than you.
2. Creating a business without consumer feedback.  One of the biggest pitfalls an entrepreneur faces is launching their product or service without having any concrete data on how it will fare. The antidote to this mistake simply involves running ideas past the target audience early and often. Market research and product testing can help.
3. Complicating a product or service.  Entrepreneurs will find that creating a new product with too many components or options—or too many separate products—almost always hinders progress. In fact, introducing too much at once will likely confuse consumers and hamper your ability to develop a strong, cogent brand identity. Startup leaders should instead focus on what they do best and build from there.
4. Putting personal bias into marketing.  With a new business, chances are high that the entrepreneur either has some personal connection to the product or a deep belief in its potential for success. This is absolutely critical for the startup’s success, but the marketing of a product shouldn’t hinge on what the entrepreneur thinks is the most notable aspect of it. Instead, startups should market their products in a way that meshes with what their customers want and that demonstrates how the product can solve customers’ problems. Believing in a product gets the ball rolling, but convincing others on their own terms is the only way to keep it going.

The others are pitfalls are:

1. Losing focus because of the competition
2. Neglecting to delegate
3. Overlooking the fundamentals
4. Halting personal education
5. Becoming impatient with the process
6. Fearing failure

2 key takeaways from the article

1. Entrepreneurs can all relate to the fact that it is difficult to navigate uncharted territory in the business world. Putting yourself out there and taking on all the risks associated with launching a startup isn’t easy.  You’re only human, and you will make mistakes in the process of building your business—so don’t beat yourself up about it. However, it can be helpful to learn about the most common errors and misjudgments that other entrepreneurs have made, so you can avoid them.  
2. Watch out in particular for the following missteps: misjudging the learning curve of a new industry, creating a business without consumer feedback, complicating a product or service, putting personal bias into marketing, losing focus because of the competition, neglecting to delegate, overlooking the fundamentals, halting personal education, becoming impatient with the process, and fearing failure.

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Topics:  Entrepreneurship, Startups

How YouTubers Are Redefining Online Video to Drive Engagement and Growth

By Srikar Karra | Entrepreneur Magazine | March 2, 2023

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Over the past decade, YouTube has grown to become one of the largest and most popular video-sharing platforms on the internet. With over 2 billion monthly active users, it’s no surprise that content creators are looking for new and innovative ways to engage with their audiences. One of the most significant shifts in recent years has been the rise of short-form content on the platform.

Short-form content, which typically ranges from 15 seconds to 5 minutes, has become increasingly popular among viewers. This trend is driven by several factors, including our ever-shortening attention spans and the need for quick and easy access to information. With so much content available online, viewers are looking for easy ways to consume information and stay entertained.  Some of the ways creators in different niches are using short-form content to drive engagement and growth:

1. Storytelling:  Whether it’s a personal story, a fictional tale or a historical anecdote, short-form storytelling is an effective way to engage audiences and keep them coming back for more. 
2. Facts and education: Short-form content is an effective way to share interesting facts and educational tidbits with viewers. Creators in the science, history and trivia niches have found success with this format, using short-form videos to provide viewers with valuable information in an engaging and entertaining way. 
3. Finance and business: Creators in the finance and business niches are using short-form content to share tips, insights and advice with viewers. From quick stock market updates to actionable business advice, short-form content is an effective way to engage with audiences and provide them with valuable information in a concise and accessible format.
4. Podcasts and interviews:  From highlights of interviews to short-form discussions on specific topics, this format is an effective way to repurpose and promote longer-form content and engage with viewers in a more accessible way.
5. Media:  Media is the future as people are leaning more and more toward digestible content in an easier manner.

3 key takeaways from the article

1. Over the past decade, YouTube has grown to become one of the largest and most popular video-sharing platforms on the internet.  One of the most significant shifts in content creators in recent years has been the rise of short-form content on the platform.
2. Short-form content, which typically ranges from 15 seconds to 5 minutes, has become increasingly popular among viewers.  This trend is driven by several factors, including our ever-shortening attention spans and the need for quick and easy access to information. With so much content available online, viewers are looking for easy ways to consume information and stay entertained.  
3. Some of the ways creators in different niches are using short-form content to drive engagement and growth are: storytelling, facts and education, finance and business, podcasts and interviews, and media.

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Topics:  Entrepreneurship, Technology, Social Media, Content Creation