Extractive summaries of and key takeaways from the articles curated from TOP TEN BUSINESS MAGAZINES to promote informed business decision-making | Week 286 | March 3-9, 2023
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Shaping Section : Ideas and forces shaping economies and industries
The tech slump is encouraging venture capital to rediscover old ways
The Economist | March 2, 2023
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Until last year, venture capital (vc) had been riding high. With interest rates close to zero and little yield to be found elsewhere, large companies, hedge funds and sovereign-wealth investors began ploughing cash into startups, sending valuations upwards. Then soaring inflation and surging interest rates brought the market crashing down. Last year the investments made in startups worldwide sank by a third.
The downturn inevitably draws comparisons to the dotcom crash of 2000-01, when deep winter set in and vc investments froze. Luckily for both founders and their backers, conditions are not so frosty today. Nonetheless, the industry that is emerging from the tech slump and into an era of dearer money looks different from the one that went into it. In many respects, vc is returning to the ways of decades past.
One change is a focus on small, profitable firms. This is a habit venture investing sometimes forgot in the boom years, when rapid growth and the hope of big profits tomorrow were prized over profits today. A second shift is a renewed emphasis on strategic firms. In an echo of vc’s earliest days, when investors often backed semiconductor-makers that vied to win huge public contracts, many today are eyeing up firms in areas that stand to gain from governments’ new fondness for industrial policy. A final shift in vc’s approach is an emphasis on better governance. In the boom years too much venture money chased too few good investments. The mismatch gave founders the upper hand in negotiations, helping them keep oversight relatively light.
Now venture finance is harder to come by. Tiger Global and other funds that were previously hands-off have started to retreat. Other investors say they intend to take up their board seats. That reduces the power of founders to dictate terms and should improve governance. A lack of venture dollars may also encourage startups to go public sooner, as might trustbusters’ greater scrutiny of big tech acquisitions. The knowledge that they might soon face scrutiny in the public markets could also discipline founders. This new sobriety will not last for ever, however. Venture capitalists are, by nature, excitable: look at the buzz over generative artificial intelligence, for instance.
3 key takeaways from the article
- Until last year, venture capital (vc) had been riding high. Then soaring inflation and surging interest rates brought the market crashing down. Last year the investments made in startups worldwide sank by a third.
- Nonetheless, the industry that is emerging from the tech slump and into an era of dearer money looks different from the one that went into it. In many respects, vc is returning to the ways of decades past. Changes are: a focus on small, profitable firms, a renewed emphasis on strategic firms and a final shift in vc’s approach is an emphasis on better governance.
- This new sobriety will not last for ever, however. Venture capitalists are, by nature, excitable: look at the buzz over generative artificial intelligence, for instance.
(Copyright)
Topics: Investment, Venture Capitalists, Inflation, Recession
Strategy & Business Model Section
Black swans, gray rhinos, and silver linings: Anticipating geopolitical risks (and openings)
By Andrew Grant | McKinsey & Company | February 24, 2023
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The global order still reels from disruptions related to the war in Ukraine, including those in energy, food security, supply chains, and more. A central concern among global CEOs is whether and how they will contend with additional geopolitical ruptures when they occur.
Scenario planning is squarely back. To facilitate such reperceiving, the authors outline a framework for geopolitical scenario planning that categorizes geopolitical events in three ways: black swans, gray rhinos, and silver linings.
Black swans. Black swans are commonly known as unpredictable events with high impact. While black swans are inherently unpredictable, pushing one’s thinking to anticipate as wide a range of scenarios as possible is critical for sound planning and preparedness. Potential black swans could run the gamut from the political implosion of a major economy; the forcible removal of a leader or a government; a significant regional military conflict; an unprecedented climate event that results in mass casualties, waves of migration, and famine; to another pandemic.
Gray rhinos. Gray rhinos are probable events with high impact. We see these risks out there in the distance, but we don’t clearly perceive their full dimensions. Sometimes, multiple gray rhinos may stampede simultaneously, resulting in an even more appropriately termed “crash” of rhinos (as a group of rhinos is called). Among the gray rhinos on the global radar is the risk of regional conflicts in Asia escalating amid broader strategic competition.
Silver Linning. In the maelstrom of geopolitical risks, organizations must step back and calmly assess openings and opportunities that allow them to operate in a safe zone and potentially garner competitive advantage. These “silver linings,” as we call them, can be fragile and readily blurred out by storm clouds, and yet they are within the reach of leaders who exhibit strategic courage amid the volatility. For example, one opening around Russia’s invasion of Ukraine has been a material disruption of Europe’s energy market and the opportunity for an accelerated renewable-energy transition, whereby Europe can potentially lead the world.
A strategic conversation about black swans, gray rhinos, and silver linings should lead to an aligned understanding within an organization of which two to three scenarios have the most material effect on an organization. Equipped with a targeted set of scenarios with key lookouts, narrow down to one to two scenarios that fuse thought with action.
Addressing geopolitics is a top priority for business. The point, however, is not simply about taking a stand. Leaders within multinational corporations also are reflecting on appropriate ways to inform policy in a more polarized geopolitical environment.
3 key takeaways from the article
- The global order still reels from disruptions related to the war in Ukraine, including those in energy, food security, supply chains, and more. A central concern among global CEOs is whether and how they will contend with additional geopolitical ruptures when they occur.
- To facilitate such reperceiving, a suggested framework for geopolitical scenario planning is to categorizes geopolitical events in three ways: black swans (unpredictable events with high impact), gray rhinos (events with high impact risks we see out there in the distance, but we don’t clearly perceive their full dimensions), and silver linings In the maelstrom of geopolitical risks, organizations must step back and calmly assess openings and opportunities).
- So the organizations need to ask what are your organization’s black swans, gray rhinos, and silver linings, and how will you manage and seize the corresponding risks and openings?
(Copyright)
Topics: Leadership, Strategic Planning, Scenario Planning
Beware the Pitfalls of Agility
By Bernadine J. Dykes et. al., | MIT Sloan Management Review | March 03, 2023
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Given the panoply of recent disruptions — including COVID-19, inflation, Russia’s invasion of Ukraine — it’s no surprise that many leaders are striving to quickly dial up the agility level of their companies. Indeed, the ability to rapidly adapt to changing conditions can be a shield against disruption and a healing prescription for crisis. But organizational agility is not a panacea. There are pitfalls in the pursuit of agility that can and do produce unintended consequences.
Agility is a multidimensional concept that comprises three sequential and interrelated processes: alertness to the need for change, the decision to make the change, and the mobilization of the organizational resources required to execute the change. Each process contains a pitfall that can subvert its outcomes. Three pitfalls are:
The Pitfall of Hubris. Agility depends on the ability of an organization to sense and interpret signals — some obvious and unambiguous, others subtle and opaque — that emanate from and reverberate within the business environment. The mindset of leaders is the pitfall in this process, especially when it is subject to the kinds of cognitive biases that lead to hubris. In the hubris pitfall, past successes, complacency, or experiences and biases become a sort of prism that distorts the view of leaders as to which signals are important and actionable versus which are not. Leaders can avoid the hubris pitfall by ensuring that their company’s signal-sensing and interpretation apparatus is broad-based.
The Pitfall of Impulsiveness. The second process of agility encompasses decisions on whether, how, and when to respond to exogenous or competitive disruptions. Research shows that the managerial stress created by a crisis or uncertainty sharply increases the pressure to “do something now.” Moreover, when under this sort of pressure, decision makers often default to heuristics, which increase decision speed but significantly degrade decision quality. Leaders can avoid the pitfall of impulsiveness while facilitating fast, high-quality decisions by processing more information, generating more options, and striking a steady balance between inductive judgment and purposeful, structured deliberation.
The Pitfall of Resource Fatigue. In this process, an organization reallocates, reconfigures, and/or modifies the resources — the technology, brand cachet, people, and money — needed to carry out change. The problem, of course, is that the resources that are needed for agility are often in short supply — a reality that gives rise to the pitfall of resource fatigue. To avoid the pitfall of resource fatigue, leaders need to consistently assess a company’s stockpile of existing resources and prioritize their efficient use and allocation.
3 key takeaways from the article
- Given the panoply of recent disruptions, it’s no surprise that many leaders are striving to quickly dial up the agility level of their companies. Indeed, the ability to rapidly adapt to changing conditions can be a shield against disruption and a healing prescription for crisis.
- But organizational agility is not a panacea. There are pitfalls in the pursuit of agility that can and do produce unintended consequences.
- Agility is a multidimensional concept that comprises three sequential and interrelated processes: alertness to the need for change, the decision to make the change, and the mobilization of the organizational resources required to execute the change. Each process contains a pitfall that can subvert its outcomes: alertness harbors the pitfall of hubris, decision-making harbors the pitfall of impulsiveness, and mobilization harbors the pitfall of resource fatigue.
(Copyright)
Topics: Business Strategy, Agility, Decision-making
Leading & Managing Section
How Chinese Companies Are Reinventing Management
By Mark J. Greeven et. al., | Harvard Business Review Magazine | March–April 2023 Issue
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Chinese companies have long been acclaimed for their manufacturing prowess and, more recently, for their pragmatic approach to innovation. Now it’s time to recognize how they are also reinventing the role of management through an approach the authors call “digitally enhanced directed autonomy,” or DEDA.
DEDA uses digital platforms to give frontline employees direct access to shared corporate resources and capabilities, making it possible for them to organize themselves around specific business opportunities without managerial intervention. Autonomy is not complete, nor is it given to everyone. Rather, it is directed exactly where it is needed, and what employees do with their autonomy is carefully tracked. The approach contrasts with the Western model of empowerment, which gives employees broad autonomy through reduced supervision. Three core features of the DEDA approach are:
- Autonomy at Scale. Autonomous teams are a long-established management concept, although the term is usually applied to small work units, such as self-managed teams in factories. What Chinese companies have done is to scale team autonomy up to groups of as many as several dozen people, notably at the customer-facing end. The freedom of such teams resonates in China, where autonomy confers status; as the Chinese saying goes, “It’s better to be the head of a chicken than the tail of a phoenix.”
- Digital Platforms in the Middle. Chinese companies use a three-system organizational structure to increase both responsiveness and efficiency. The front end, or system, encompasses all customer and partnership interfaces and interactions. The back end consists of long-term assets such as critical databases, warehouses, and production plants. Traditionally in the West, middle managers and corporate functions assume that connective role. Chinese companies replace the bureaucracy with a digital platform that allows front-end employees to directly access the resources and capabilities they need. In essence, that platform centralizes shared services, data, and capabilities to enable decentralized decision-making.
- A Focus on Clearly Defined Projects. One major advantage Chinese companies have over Western ones is execution. In part, that’s driven by China’s larger and more compliant workforce and the cultural emphasis on being a good follower. But Chinese management also has a feature that encourages faster execution and decision-making: “single-threaded leadership,” a concept first applied at Amazon but very much embraced by Chinese companies. The idea is to severely limit managerial distraction by giving a leader a clearly defined task, budget, and timeline—typically to find a solution to a specific problem.
3 key takeaways from the article
- Chinese companies have long been acclaimed for their manufacturing prowess and, more recently, for their pragmatic approach to innovation. Now it’s time to recognize how they are also reinventing the role of management through an approach the authors call “digitally enhanced directed autonomy,” or DEDA.
- DEDA uses digital platforms to give frontline employees direct access to shared corporate resources and capabilities, making it possible for them to organize themselves around specific business opportunities without managerial intervention. Autonomy is not complete, nor is it given to everyone. Rather, it is directed exactly where it is needed, and what employees do with their autonomy is carefully tracked.
- Three core features of the DEDA approach are: autonomy at scale, digital platforms in the middle, and a focus on clearly defined projects.
(Copyright)
Topics: Strategy, Business Model, Teams
5 Attributes of Team Members and Leaders That Often Limit Success
By Martin Zwilling | Inc Magazine | February 22, 2023
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One of the keys to your success as a business professional and leader is your ability to nurture relationships and select associates who have the attributes to help you build your career or lead a team, rather than people who will never challenge you or may be looking out only for themselves. As a business adviser the author believes that the right people are better than the best strategy. Finding the right people starts with understanding five key patterns:
- Relying too much on intellectual horsepower only. Some people have an abundance of raw intellect but are short on emotional intelligence. This may limit their ability to work with others, or their interest in working on themselves, to adapt and accept change. To be a good leader, you have to be able to take feedback and effectively deliver feedback to others.
- Being too deferential to potential disagreement. Of course, you always want people around you who listen, but also you also want them to have the confidence to stand up for what they believe in, even if it causes a bit of conflict. When you need innovation, or for complex issues, you often may need some disagreement to make the right decision.
- Being unable to recognize or handle workplace politics. Every office has politics, whether acknowledged or not. People who build constructive relationships with co-workers, outside constituents, and management will always be less impacted by politics and more successful in helping you.
- Not being willing to share credit for successes at work. For some team members and associates, success is all about “I” rather than “we.” These associates or aspiring leaders will never gain the trust and following necessary to get the most from everyone for your success or the business. Listen carefully to their language during initial conversations. The toughest people to spot who are focused primarily on themselves are covert narcissists. Look for a quiet smugness or sense of superiority, including condescending stares, lack of eye contact, dismissive gestures, and overall inattentiveness.
- Being unwilling to show or admit any weaknesses. Some people try to hide their flaws by evading questions or pushing their own agenda instead of listening and responding to yours. Look for people who are honest and authentic with others, and not afraid to admit mistakes. We all have weaknesses and need people with complementary skills.
2 key takeaways from the article
- One of the keys to your success as a business professional and leader is your ability to nurture relationships and select associates who have the attributes to help you build your career or lead a team, rather than people who will never challenge you or may be looking out only for themselves. The right people are better than the best strategy.
- Finding the right people starts with understanding five key patterns: relying too much on intellectual horsepower only than on emotional intelligence; being too deferential to potential disagreement; being unable to recognize or handle workplace politics; not being willing to share credit for successes at work; and being unwilling to show or admit any weaknesses.
(Copyright)
Topics: Entrepreneurship, Personal Development, Leadership
Entrepreneurship Section
4 Ways A Single Word Has The Power To Positively Change Your Perspective
By Amy Blaschka | Forbes Magazine | March 4, 2023
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As a professional writer, the author believes in the power of words. Depending on their use, they can hold us back or propel us forward. This is especially true when applied to our perspective. Depending on how we view a situation, it can be negative or positive. Psychologists call this “reframing” because it helps create a different way of viewing and experiencing events, ideas, concepts, and emotions to find more positive alternatives which influence your thoughts and behaviors. And surprisingly, just a single word can make a massive difference in positively changing your perspective; here are four ways how:
- Add “yet”. When you feel frustrated about what you currently can’t do or don’t have it’s easy to get trapped in a downward spiral. However, when you add the word “yet” after one of these negative statements, it transforms it into a more positive one: “I don’t have my dream job” becomes “I don’t have my dream job yet.” “Yet” implies that there will be a future solution or resolution; the current situation is only temporary.
- Swap “have to” with “get to”. When you find yourself lamenting about having to do something, use your awareness to catch yourself. When you swap out an “I have to” with “I get to,” everything changes. “I have to create a new marketing plan” is an obligation, whereas “I get to create a new marketing plan” is an opportunity.
- Turn “Yes, but…” into “Yes, and…” “Yes, but…” is discouraging, disheartening, and negative; it halts a conversation and any forward progress of an idea. Improvisation, which is rooted in the principle of “Yes, and…” offers a simple way to reframe those situations. In improv, one partner must agree with what the other has just said or done and then add to it by saying, “Yes, and…”. Cultivating a “Yes, and…” mindset means that you’re curious about and open to the suggestions of others, agree with at least part of what they say, and then find a way to build on their ideas.
- Shift from “I’m going through this” to “I’m growing through this”. Choosing to see your current circumstances as “I’m going through this” can be demoralizing and deflating. “I’m growing through this” is action-oriented, positive, and empowering. It means you’ll emerge from your current circumstances with newly acquired wisdom, changed for the better. Shifting your mindset to the possibilities of a situation helps you not only while you’re in the midst of a trying time but also enables you to reframe future scenarios so you can thrive.
2 key takeaways from the article
- Depending on their use, words can hold us back or propel us forward. This is especially true when applied to our perspective. Depending on how we view a situation, it can be negative or positive. Psychologists call this “reframing”.
- Four can make a massive difference in positively changing your perspective. These are: add “yet” (implies that there will be a future solution or resolution; the current situation is only temporary), Swap “have to” with “get to” (‘have to’ is an obligation, whereas ‘get to’ is an opportunity), Turn “Yes, but…” into “Yes, and…” (“Yes, but…” is discouraging, disheartening, and negative; Improvisation, which is rooted in the principle of “Yes, and…” offers a simple way to reframe those situations), and Shift from “I’m going through this” to “I’m growing through this” (Going through something is passive; it’s happening to you. However, is action-oriented, positive, and empowering).
(Copyright)
Topics: Personal Development, Leadership, Communication
Good (and Bad) Branding Advice That Can Make (or Break) Your Success
By Zaheer Dodhia | Entrepreneur Magazine | March, 2023
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There’s a plethora of branding advice out there, and if you’re lucky, some of it will come from actual experts — people who have been there, done that and learned things the hard way. But not all branding advice is good advice. In fact, some of it is quite the opposite. It is sometimes challenging to sift through the clutter to find valuable tips and tricks, so let’s start by debunking some branding myths while validating some branding virtues.
- First choices vs. changing things later. It’s easy to get attached to the very first iteration of your brand’s new logo design, especially if you had a hand in designing it yourself. But the first iteration isn’t always the best iteration or even the most accurate for your brand. On the other hand, neither is the tendency to rush into making the decision with the idea that you can always change the design later. If you launch with a hastily-chosen logo, that’s likely what your audience is going to remember — no matter how quickly you change it afterward.
- Good feedback vs. harsh criticism. Neither the customer nor the critic is always right. If you listen to every single nitpick, no matter how minuscule or personally motivated, you’ll never get anywhere. Get a variety of outside opinions on your brand so that you can garner high-quality insight.
- Change vs. consistency. Consistency is important in establishing a brand. On the other hand, stubbornly clinging to a branding strategy that may not be doing its best work isn’t a great idea either. Be consistent and willing to adapt. Focus on your promises and values as a brand and let them influence the individual branding decisions.
- The importance of social media. Research the demographic for your social media platform, be choosy about which platforms you use, practice cohesive and consistent branding across the board, and social media will reward you with more opportunities.
- The key to good advice. It’s a good idea to take advice with a grain of salt. There’s always going to be someone out there with a completely different experience than your own. That being said, the odds are that you’ll find someone whose circumstances mirror your own and whose advice you can really trust. Ultimately, what. makes advice good advice is whether it works for you or not.
2 key takeaways from the article
- There’s a plethora of branding advice out there, and if you’re lucky, some of it will come from actual experts — people who have been there, done that and learned things the hard way. But not all branding advice is good advice. In fact, some of it is quite the opposite. It is sometimes challenging to sift through the clutter to find valuable tips and tricks
- Some branding myths while validating some branding virtues are: don’t stick to the first choices consider changing brand logo e.g., later but cautions are advised; get a variety of outside opinions on your brand so that you can garner high-quality insight; be consistent and willing to adapt; research the demographic for your social media platform; be choosy about which platforms you use; and practice cohesive and consistent branding across the board.
(Copyright)
Topics: Startups, Branding, Scaling
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