Weekly Business Insights from Top Ten Business Magazines
Extractive summaries and key takeaways from the articles curated from TOP TEN BUSINESS MAGAZINES to promote informed business decision-making | Since September 2017 | Week 351 | May 31 – June 6, 2024 | Archive
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Shaping Section
Foreign investors are rejecting Indian stocks
The Economist | May 31, 2024
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How to explain the disparity? India’s economy is growing astonishingly fast, Bangalore and Mumbai have become destinations for bosses of global financial firms and Narendra Modi trumpets the country’s appeal in his electoral campaign. Given the enthusiasm, surely foreign money is flooding into the country.
Not quite. In April foreign investors dumped $1bn-worth of Indian shares. In May they dumped another $4.2bn. This is a sliver of the roughly $900bn of Indian shares in foreign hands, but it is a striking move given the mood music—and one that has pushed the share of the Indian stockmarket held by foreigners to just 18%, its lowest in a dozen years.
The usual explanations for the trend are unconvincing. India’s election has prompted jitters, yet locals remain happy to enter the market and Mr Modi, who looks certain to win, is a sure-footed custodian of the economy. Indian companies are expensive, trading at double the level of both their accounting (“book”) value and their Chinese competitors. Still, India’s economy is on a tear, its firms offer superior returns on equity and they are deleveraging, meaning that they are producing more profits while taking less risk.
An alternative—more convincing—explanation rests on how India treats foreign investment. The country has never been a straightforward destination for international capital, owing to disclosure rules and taxes on capital gains and dividends. Until recently, however, such taxes could be avoided or minimised if the investing firm was registered in a country with which India has a tax treaty. The most popular such countries were Mauritius, which since 1983 has offered an escape route from Indian levies, and Singapore, which has a treaty designed to mirror Mauritius’s.
The first sign of change came in 2017 when India imposed its own tax regime on new funds registered in these countries. Then, in March, officials confirmed reports that tweaks to its treaties might put older funds at risk. They asserted that a fund must be located alongside a large portion of its operations, which would exclude many in Mauritius. Although ministers declined to provide details, investors are confronting the possibility of vast tax claims and the need to move businesses.
These changes are not entirely without cause. Local investors were annoyed that their foreign peers received better tax treatment; some channelled domestic investments via foreign funds to minimise tax bills. That, in turn, irked officials, since local investors were then able to avoid India’s stringent disclosure requirements.
Moreover, the government planned to compensate for making investment tougher in this way by easing things in another. Nishith Desai, a lawyer, recalls a trip to Singapore in 2007 on behalf of the state of Gujarat, with its then chief minister, Mr Modi, who asked why India could not build its own Singapore-like financial hub. Today, that is his signature project: the Gujarat International Financial Tec-City (gift City). But until things improve, foreign investors will see the messy situation and conclude that, for now, it is best to stay away.
2 key takeaways from the article
- India’s economy is growing astonishingly fast, Bangalore and Mumbai have become destinations for bosses of global financial firms. Given the enthusiasm, surely foreign money is flooding into the country. Not quite. In April foreign investors dumped $1bn-worth of Indian shares. In May they dumped another $4.2bn. This is a sliver of the roughly $900bn of Indian shares in foreign hands, but it is a striking move given the mood music—and one that has pushed the share of the Indian stockmarket held by foreigners to just 18%, its lowest in a dozen years.
- One of the more convincing—explanation rests on how India treats foreign investment. The country has never been a straightforward destination for international capital, owing to disclosure rules and taxes on capital gains and dividends. Until recently, however, such taxes could be avoided or minimized if the investing firm was registered in a country with which India has a tax treaty. Nevertheless, recent legislation for instance, in 2017 India imposed its own tax regime on new funds registered in these countries, and it is expected that the old funds will also be brought in this scope.
(Copyright lies with the publisher)
Topics: India, Capital Markets, Regulators
The state of tourism and hospitality 2024
By Matteo Pacca et al., | McKinsey & Company | Report published in later half of May 2024
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Tourism and hospitality are on a journey of disruption. Shifting source markets and destinations, growing demand for experiential and luxury travel, and innovative business strategies are all combining to dramatically alter the industry landscape. Given this momentous change, it’s important for stakeholders to consider and strategize on three major themes:
- The bulk of travel spending is close to home. Stakeholders should ensure they capture the full potential of domestic travel before shifting their focus to international travelers. And they should start with international travelers who visit nearby countries—as intra-regional trips represent the largest travel segment after domestic trips. Given travelers’ preference for proximity, how can tourism stakeholders further capitalize on Domestic and intra-regional travel demand? Here are a few strategies: Craft offerings that encourage domestic tourists to rediscover local gems. Fold one-off domestic destinations into fuller itineraries. And make crossing borders into neighboring countries seamless.
- Source markets are shifting. Although established source markets continue to anchor global travel, Eastern Europe, India, and Southeast Asia are all becoming fast-growing sources of outbound tourism. The destinations of the future may not be the ones you imagine. Alongside enduring favorites, places that weren’t on many tourists’ maps are finding clever ways to lure international travelers and establish themselves as desirable destinations. While acknowledging that historical source markets will continue to constitute the bulk of travel spending, tourism players can consider actions such as these to capitalize on growing travel demand from newer markets: Reduce obstacles to travel. Use culturally relevant marketing channels to reach new demographics. Give new travelers the tech they expect. And create vibrant experiences tailored to different price points.
- The destinations of the future may not be the ones you imagine. Alongside enduring favorites, places that weren’t on many tourists’ maps are finding clever ways to lure international travelers and establish themselves as desirable destinations. Tourism players might consider taking some of these actions to lure tourists to less familiar destinations: Collaborate across the tourism ecosystem. Use infrastructure linkage to promote new destinations. Deploy social media to reach different demographics. Embrace unknown status.
As destinations and source markets have changed, tourism and hospitality companies have evolved too. Six key trends have shaped business models in this sector over the past decade. In accommodation, asset-light models like franchising and management have proliferated, though luxury and small-scale brands are opting out. Consolidation has driven economies of scale. Hotels are looking to reclaim their relationship with guests, and almost two decades in, home sharing is charting its own course. In the experiences space, reinvention is the name of the game. Cruises and theme parks have both focused on attracting new demographics while fine-tuning their revenue management strategies. Experiences remains a highly fragmented, legacy sector, creating massive opportunity for those able to crack the code on aggregation.
2 key takeaways from the report
- Tourism and hospitality are on a journey of disruption. Shifting source markets and destinations, growing demand for experiential and luxury travel, and innovative business strategies are all combining to dramatically alter the industry landscape. Given this momentous change, it’s important for stakeholders to consider and strategize on three major themes: The bulk of travel spending is close to home. Source markets are shifting. And the destinations of the future may not be the ones you imagine.
- In order to capitalize on these themes we should craft offerings that encourage domestic tourists to rediscover local gems, fold one-off domestic destinations into fuller itineraries, make crossing borders into neighboring countries seamless, reduce obstacles to travel, use culturally relevant marketing channels to reach new demographics, give new travelers the tech they expect, create vibrant experiences tailored to different price points collaborate across the tourism ecosystem, use infrastructure linkage to promote new destinations, deploy social media to reach different demographics and embrace unknown status.
(Copyright lies with the publisher)
Topics: Tourism, Hospitality, Global Economy, Trends, Inter-regional Tourism, Domestic Tourism, International Tourism, Tourism Destinations, Tourism Destination Organizations.
What I learned from the UN’s “AI for Good” summit
By Melissa Heikkilä | MIT Technology Review | June 4, 2024
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The author just came back from Geneva, which last week hosted the UN’s AI for Good Summit, organized by the International Telecommunication Union. The summit’s big focus was how AI can be used to meet the UN’s Sustainable Development Goals.
According the author, he didn’t leave the conference feeling confident AI was going to play a meaningful role in advancing any of the UN goals. In fact, the most interesting speeches were about how AI is doing the opposite. Sage Lenier, a climate activist, talked about how we must not let AI accelerate environmental destruction. Tristan Harris, the cofounder of the Center for Humane Technology, gave a compelling talk connecting the dots between our addiction to social media, the tech sector’s financial incentives, and our failure to learn from previous tech booms. And there are still deeply ingrained gender biases in tech, Mia Shah-Dand, the founder of Women in AI Ethics, reminded us.
So while the conference itself was about using AI for “good,” I would have liked to see more talk about how increased transparency, accountability, and inclusion could make AI itself good from development to deployment.
We now know that generating one image with generative AI uses as much energy as charging a smartphone. The author liked to have a more honest conversations about how to make the technology more sustainable itself in order to meet climate goals. And it felt jarring to hear discussions about how AI can be used to help reduce inequalities when we know that so many of the AI systems we use are built on the backs of human content moderators in the Global South who sift through traumatizing content while being paid peanuts.
Making the case for the “tremendous benefit” of AI was OpenAI’s CEO Sam Altman, the star speaker of the summit. Altman was interviewed remotely by Nicholas Thompson, the CEO of the Atlantic, which has incidentally just announced a deal for OpenAI to share its content to train new AI models. OpenAI is the company that instigated the current AI boom, and it would have been a great opportunity to ask him about all these issues. Instead, the two had a relatively vague, high-level discussion about safety, leaving the audience none the wiser about what exactly OpenAI is doing to make their systems safer. It seemed they were simply supposed to take Altman’s word for it.
When Thompson asked Altman what the first good thing to come out of generative AI will be, Altman mentioned productivity, citing examples such as software developers who can use AI tools to do their work much faster. The author thinks the jury is still out on that one.
3 key takeaways from the article
- In the last week of May 2024, UN hosted AI for Good Summit, organized by the International Telecommunication Union. The summit’s big focus was how AI can be used to meet the UN’s Sustainable Development Goals.
- The attendees didn’t leave the conference feeling confident how AI was going to play a meaningful role in advancing any of the UN goals. In fact, the most interesting speeches were about how AI is doing the opposite, including how we must not let AI accelerate environmental destruction; connection of the dots between our addiction to social media, the tech sector’s financial incentives, and our failure to learn from previous tech booms; and still deeply ingrained gender biases in tech.
- What the first good thing to come out of generative AI will be, Altman mentioned productivity, citing examples such as software developers who can use AI tools to do their work much faster. The author thinks the jury is still out on that one.
(Copyright lies with the publisher)
Topics: Technology, Artificial Intelligence, Sustainable Development Goals, Eradication of Poverty
Strategy & Business Model Section
What Can Business Learn from Art?
By Scott Berinato | Harvard Business Review Magazine | May–June 2024 Issue
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Understanding how art gets made, and why, is a path to accomplishment and mastery—yes, even in the corporate world. Art is basically product development. Or, as one composer says, it’s “more like being a carpenter than like being God….What we do is a craft.” The product—whether it’s a mural, a song, a dance, or a joke—may seem miraculous, but its creation is not. It was born from the same effort you might put in to find mastery in your own work.
Mastery is the obsession of the New Yorker writer Adam Gopnik in The Real Work. He excavates seven traits that define the highest achievement, from performance to intention to action and more, and tells moving stories from realms as varied as baking, dancing, boxing, and driving. In an engaging set piece, Gopnik explains what magicians mean when they talk about “the real work”: the “accumulated craft, savvy, and technical mastery that makes a magic trick great.” It’s not who does the trick first, or who does it best, necessarily, but who did the work to master it.
In delving into how hard it is to do the real work in any pursuit or profession, he exposes why mastery is elusive. “A seven-person creative team of equals is called war.” And yet, that’s what it takes to launch a show, and people do it because when they nail it, the thrill is unparalleled—and what they’ve put into the world matters. “We all know the real work in whatever field it is we’ve mastered,” Gopnik writes. “It’s shorthand…for the difference between accomplishment and mere achievement.”
He carries this sentiment into a tiny, 60-page companion tome, All That Happiness Is, in which he explains that achievement is merely completing a task, the reward for which is often another task, whereas accomplishment is “the engulfing activity we’ve chosen, whose reward is the rush of fulfillment, the sense of happiness that rises uniquely from absorption in a thing outside ourselves.” He notes, too, that accomplishment is egalitarian. “Every enterprise, every job, every short-order recipe—everything we do can be done more or less beautifully.” Whether it’s plumbing or building rockets or leading a team, the real work involves some artistry.
The process of creating art may look like your plans for an innovative new offering, or your attempt to devise a growth strategy, or even your effort to build a profoundly effective financial model. But those are just achievements. Artists, craftspeople, are striving for accomplishment. That’s possibly you want to, too. After all, you didn’t flip past this little essay. And in that small act you’ve already done a bit of the real work.
3 key takeaways from the article
- Understanding how art gets made, and why, is a path to accomplishment and mastery—yes, even in the corporate world. Art is basically product development. Or, as one composer says, it’s “more like being a carpenter than like being God….What we do is a craft.” The product—whether it’s a mural, a song, a dance, or a joke—may seem miraculous, but its creation is not. It was born from the same effort you might put in to find mastery in your own work.
- It’s not hard to apply his description of mastery to any business contex but it is elusive: “A seven-person creative team of equals is called war. And yet, that’s what it takes to launch a show, and people do it because when they nail it, the thrill is unparalleled—and what they’ve put into the world matters. “We all know the real work in whatever field it is we’ve mastered. It’s shorthand…for the difference between accomplishment and mere achievement.”
- Achievement is merely completing a task, the reward for which is often another task, whereas accomplishment is “the engulfing activity we’ve chosen, whose reward is the rush of fulfillment, the sense of happiness that rises uniquely from absorption in a thing outside ourselves.
(Copyright lies with the publisher)
Topics: Personal Development, Skills, Innovation, Artistic
How Birkenstock Became an Improbable Luxury Empire
By Tim Loh | Bloomberg Businessweek | June 4, 2024
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How the 250-year-old German orthopedic shoe company with Succession-level family drama transformed itself into a luxury behemoth.
In early October, when Birkenstock, seventh-generation scion of the German footwear dynasty, capped off a decade of explosive growth with an initial public offering, Christian and Alex the sixth generation offsprings became billionaires. Oliver Reichert is the man most responsible for their windfall.
At the time of Reichert’s arrival, the one thing everyone at the company agreed on was that Birkenstock’s patented “footbed”—the bulky sole of the distinctive sandals—was the source of the magic. Beyond that, nobody agreed on what exactly to do. Plenty of company veterans, whom Reichert eventually referred to as “footbed fascists,” looked to change absolutely nothing. “It was almost like the Bible had been written, and we didn’t need a New Testament,” Reichert, who became the first outsider to run the business in its 250-year history, once told a German newspaper. “Then I came in like a mix of Martin Luther, Muhammad Ali and Napoleon.”
Reichert’s unsubtle confidence worked. Before long, Birkenstock sandals were landing everywhere from Parisian runways and high-end department stores to the feet of entire families from Brooklyn to Boise. Gone were the days when you could pull off Germany’s autobahn and snap up a pair of Arizona sandals for under $50 at a rest stop. Under Reichert’s watch, Birkenstock became an accessible luxury, the company’s sales more than tripling, to $830 million by 2020.
Then, the following year, Reichert unexpectedly sold a majority stake to L Catterton Management Ltd. in a deal that valued Birkenstock at about $4.9 billion. In the three years since, Birkenstock has continued raising prices, rolling out higher-end models and cutting out retail partners while building up its own direct-to-consumer sales. It’s also expanded its German manufacturing plants, with plans to double production in the next few years to enable a big push into China, India and other countries for the first time. And, of course, it went public.
When the company held its IPO in New York last fall, Reichert waxed philosophical. The world was no longer a primordial forest where humans walked barefoot all day on yielding, uneven ground, he said. We now have to contend with hard surfaces such as pavement and office floors, which don’t support the arches of your feet. So, Birkenstock’s footwear has become the next-best option. “The footbed promotes Naturgewolltes Gehen,” the native German explained in a registration statement with the US Securities and Exchange Commission, using a phrase that essentially translates as walking the way nature intended.
The IPO was a disaster. After raising about $1.5 billion, shares promptly fell about 13% on the first day, which made it the worst debut for a big US listing in more than two years. In January, after the company’s first quarterly earnings report awkwardly described Birkenstock as a “global zeitgeist and purpose brand,” investors were still confused, and the company’s shares plunged again.
A few days later, Reichert, clad in Boston clogs and a cozy sweater in his Munich office, bristled at investors’ lack of understanding. Birkenstock isn’t really a footwear brand at all, he mused. It can’t be lumped in with sneaker makers that are willing to contract out the manufacturing process to factories half a world away, nor is it a true creature of fashion. If anything, he concluded, it is more of a health-care company focused on feet. “We have a total addressable market of every human being,” says Reichert.
To some extent, Birkenstock’s staying power epitomized the steadfast “Made in Germany” businesses that helped fuel West Germany’s rapid economic growth during the Cold War. The companies, often called Mittelstand firms or “hidden champions,” are typically quiet, family-owned, thrifty affairs that focus on dominating market niches for the long term by producing high-quality products, often in Germany, that are hard to replicate. That ethos was evident in two of Karl’s guiding rules. First, sock away money in good years to bridge the gap in tough times. And second, keep each new shoe model in catalogs for at least five years to avoid falling prey to fickle fashion trends.
2 key takeaways from the article
- How the 250-year-old German orthopedic shoe company with Succession-level family drama transformed itself into a luxury behemoth. In early October, when Birkenstock, seventh-generation scion of the German footwear dynasty, capped off a decade of explosive growth with an initial public offering, Christian and Alex, the sixth generation offsprings, became billionaires.
- To some extent, Birkenstock’s staying power epitomized the steadfast “Made in Germany” businesses that helped fuel West Germany’s rapid economic growth during the Cold War. The companies, often called Mittelstand firms or “hidden champions,” are typically quiet, family-owned, thrifty affairs that focus on dominating market niches for the long term by producing high-quality products, often in Germany, that are hard to replicate. That ethos was evident in two of Karl’s (the 7th generation successor) guiding rules. First, sock away money in good years to bridge the gap in tough times. And second, keep each new shoe model in catalogs for at least five years to avoid falling prey to fickle fashion trends.
(Copyright lies with the publisher)
Topics: Strategy, Business Model, Germany, Birkenstock, Shoes, Marketing, Distribution, Branding, Luxury Brands
Find a Circular Strategy to Fit Your Business Model
By Samsurin Welch and Khaled Soufani | MIT Sloan Management Review | June 03, 2024
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Roughly half of global emissions are linked to the production and consumption of goods such as food, packaging, buildings, and textiles. Accelerating decarbonization will require that we rethink the materials and services sourced from suppliers, the distribution and use of products by customers, and what happens to products at end of life.
That’s where circular models come into focus. They aim to optimize the use of material resources in organizations and thus help reduce carbon emissions and mitigate strain on natural systems. Despite compelling advantages, circular businesses remain uncommon, largely due to the challenge of identifying and operationalizing suitable models that align with a firm’s overall strategy and capabilities. Based on their research, the authors explain four different routes to circularity, and key considerations for effectively implementing them.
- Extend Product Lifespan. Reuse, resale, repair, or refurbishment are among the use-longer tactics that help companies maximize the usable life of products, reducing both waste and consumption of new resources. The challenge for companies that pursue this approach is preserving the benefits customers derive from newly manufactured products. Some ways to operationalize this include the following: design products for longevity, establish repair and refurbishment capabilities, and leverage data and digitalization.
- Reclaim and Regenerate Resources. For companies following the use-again approach to capture value from waste materials, the distinction between technical and biological resources is key. The two require different approaches. So remanufacture or recycle technical materials, turn waste into revenue, and design products with recycling in mind, and establish reverse logistics systems and partnerships.
- Maximize Product Use. In many cases, consumers may not feel the need to own a product. Companies can sell access rather than ownership; sharing, renting, and service-based approaches can replace product sales. These models boost circularity by increasing asset utilization and aligning incentives to encourage customers to use less, use longer, and use again. The use-differently approach also can broaden access to products that might otherwise be out of reach for some consumers. For this, the organizations need to: design services based on customer jobs-to-be-done, leverage digital platforms, and align incentives.
- Minimize Resource Use. Figuring out how to use less of any resource should always be a priority when conservation is the objective. With this goal, organizations can think broadly about how they can minimize the use of energy, materials, and water in operations. Organizations need to focus on: efficiency, Design out waste, and tap data analytics.
Numerous opportunities are available for companies to embed circularity into their products and operations. While approaches may vary, the research has found that successful initiatives pay attention to the following factors: seek strategic fit, committed leadership focusing on circularity, combined models, offer a compelling value proposition, seek value-based collaborations and partnerships, and pursue the journey of learning and iteration.
3 key takeaways from the article
- Roughly half of global emissions are linked to the production and consumption of goods such as food, packaging, buildings, and textiles. Accelerating decarbonization will require that we rethink the materials and services sourced from suppliers, the distribution and use of products by customers, and what happens to products at end of life. That’s where circular models come into focus.
- The aim of circular models is to optimize the use of material resources in organizations, and thus help reduce carbon emissions and mitigate strain on natural systems. The practical principles underlying circular business models can be stated as four simple goals: extend product lifespan, reclaim and regenerate resources, maximize product use, and minimize resource use.
- Numerous opportunities are available for companies to embed circularity into their products and operations. While approaches may vary, the research has found that successful initiatives pay attention to the following factors: seek strategic fit, committed leadership focusing on circularity, combined models, offer a compelling value proposition, seek value-based collaborations and partnerships, and pursue the journey of learning and iteration.
(Copyright lies with the publisher)
Topics: Sustainable Development, Circularity
Personal Development, Leading & Managing Section
CEOs can hurt their companies if they stay too long. When’s the right time to say goodbye?
By Geoff Colvin | Fortune Magazine | Jun-July 2024 Issue
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How can a company know when it’s time for a CEO to go? Anecdotes fall all over the map. Warren Buffett, the longest-tenured CEO in the Fortune 500, has been running Berkshire Hathaway for 54 years, and the stock is still hitting new highs. By contrast, Fred Kindle needed only three years as CEO (2005–2008) to turn around venerable but money-losing Swiss industrial conglomerate ABB and deliver shareholders a 262% total return.
Between those two extremes, many boards default to the mean. The S&P 500 average is 9.2 years, and despite occasional articles exclaiming that CEO tenures are shortening, they aren’t; over the past 20 years they’ve held fairly stable.
Yet for corporate boards, the average is of limited help. Considering that CEOs with tenures of wildly more and less than 10 years have performed spectacularly, dumping a leader just because he or she has hit the decade mark may not be a slam dunk. As boards face unprecedented pressure to get succession right, a new leadership framework has emerged around when to say when. The matrix is laid out in The Life Cycle of a CEO: The Myths and Truths of How Leaders Succeed, written by Spencer Stuart’s Claudius Hildebrand and Stark and based on an influential earlier article they wrote with Jim Citrin, who leads the firm’s CEO practice. Their model comprises five stages.
Stage one The first year is typically filled with enthusiasm among investors, directors, employees, and the CEO. The stock usually rises.
Stage two In the second year or so, the enthusiasm subsides. Initiatives may take longer than planned, and bad news gets more attention. The CEO is tested in new ways.
Stage three The next two or three years are when CEOs recover from stage two, reinventing themselves as they more confidently deal with the board and Wall Street.
Stage four Years six to 10 are what the Spencer Stuart researchers call the complacency trap. CEOs who have made it this far may start playing defense rather than offense. Instead of launching novel initiatives, they may rationalize why the company’s status quo is just fine for the future. Other CEOs in this stage do the opposite: They realize they must shake up the organization.
Stage five Years 11 and beyond, if the CEO holds on until then, tend to yield excellent performance until year 14 or so. Big bets from years ago may finally start to pay off. Many CEOs are thinking about their legacy.
It’s little wonder that too often the stage-five CEO and the board glide past the performance peak and onto the downward trend line, hoping for a turnaround. As the years go by, the accumulating damage is greater than it seems. The company’s best potential CEO successors get tired of waiting and go elsewhere—a strong signal of an outdated CEO. In addition, a 20-year study of U.S. CEOs shows that a long-tenured CEO’s successor usually performs poorly.
When very long-tenured CEOs (15 years or more) finally leave, chances are good they stayed too long. But no one could have known for sure; along the way there was always hope. In making this decision there are no certainties, only tough calls.
3 key takeaways from the article
- How can a company know when it’s time for a CEO to go? Anecdotes fall all over the map. Warren Buffett, the longest-tenured CEO in the Fortune 500, has been running Berkshire Hathaway for 54 years, and the stock is still hitting new highs. By contrast, Fred Kindle needed only three years as CEO (2005–2008) to turn around venerable but money-losing Swiss industrial conglomerate ABB and deliver shareholders a 262% total return.
- Between those two extremes, many boards default to the mean. The S&P 500 average is 9.2 years, and despite occasional articles exclaiming that CEO tenures are shortening, they aren’t; over the past 20 years they’ve held fairly stable.
- Considering that CEOs with tenures of wildly more and less than 10 years have performed spectacularly, dumping a leader just because he or she has hit the decade mark may not be a slam dunk. As boards face unprecedented pressure to get succession right, a new leadership framework has emerged around when to say when. The model comprises five stages. In making this decision there are no certainties, only tough calls.
(Copyright lies with the publisher)
Topics: Leadership, Succession, CEO, Longevity, Board of Directors
How To Mentor Our Next Generation Of Leaders
Contributor is John Baldoni | Forbes Magazine | June 4, 2024
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The research on mentoring is clear. Those who are mentored out-earn and outperform those who are not. They make higher salaries, get promoted more often, have greater job and career satisfaction and lower rates of burnout. For organizations that invest in mentoring their employees, they benefit from higher productivity and greater loyalty – as stipulated by Ruth Gotian and Andy Lopata in The Financial Times Guide to Mentoring: A Complete Guide to Effective Mentoring. The challenge is implementing programs where mentoring can be accessible, equitable and measurable.
Running A Mentoring Program. The initiation and maintenance of mentoring typically belong to three functions: human resources, leadership and development, and volunteer efforts. In all three, it is important to select the right mentors and match them with candidates seeking mentoring. It will not always work, but if the program is rigorous, good matches will follow. Additionally, mentoring programs can embrace “the outside world” by finding mentors and mentees from outside the organization – referred as “cross-pollinating.” Bringing together mentors and mentees from different worlds can increase the range of ideas brought to challenges.
The Relationship. Mentoring is a relationship founded upon trust. As such, trust is earned. If mentors “are distracted, impatient, frustrated, bored or judgmental” they “will silence the other person and so creating an open environment is less about trying to fix the person who is remaining silent, telling them to be braver, and more about creating an environment where they don’t have to be so brave in the first place. In other words, if you are mentoring—or being mentored—you need to be attentive, focused and engaged.
The Mentoring Check. The book’s conclusion adds insight into checking yourself as a mentor. The first step in becoming a more effective mentor is self-reflection. Review your existing mentoring relationships, whether formal or informal. What kind of difference—or benefit—are you delivering to your mentee? Remember mentorship knows no boundaries, it’s about sharing and uplifting others. Mentees also need to evaluate their learnings. “The mentor-mentee relationship is a two-way street. And it’s crucial that you receive the support you require to continue your growth and development. Mentoring can also be a community effort, where mentees receive support from more than one mentor.
Mentoring is an investment in the future that benefits both those who give it and those who receive it and in return organizations benefit.
3 key takeaways from the article
- The research on mentoring is clear. Those who are mentored out-earn and outperform those who are not. They make higher salaries, get promoted more often, have greater job and career satisfaction and lower rates of burnout. For organizations that invest in mentoring their employees, they benefit from higher productivity and greater loyalty. The challenge is implementing programs where mentoring can be accessible, equitable and measurable.
- The initiation and maintenance of mentoring typically belong to three functions: human resources, leadership and development, and volunteer efforts. In all three, it is important to select the right mentors and match them with candidates seeking mentoring.
- A good mentorship program brings mentor-mentees internally but also embrace “the outside world” by finding mentors and mentees from outside the organization. Mentoring is a relationship founded upon trust and that is earned. Review your existing mentoring relationships, whether formal or informal. What kind of difference—or benefit—are you delivering to your mentee?
(Copyright lies with the publisher)
Topics: Leadership, Mentorship, Succession, Training, Development
Entrepreneurship Section
I’m a Business Professor: Here Are 8 Lessons From Commencement Speeches I Will Never Forget
By Robin Landa | Inc Magazine | May 23, 2024
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The author has attended 30 graduation ceremonies and commencement speeches as a professor, granting her the opportunity to absorb wisdom from eminent individuals every spring. According to her, she has heard her fair share of commencement speeches at her university, and make a point to listen to those from other institutions as well. Here are eight valuable lessons she has gleaned for business owners and leaders.
- Uphold integrity in every aspect of business and life. According to Michael Dell, founder, chairman, and CEO of Dell Technologies, “Act with integrity in all dimensions of your life. There’s integrity in human interactions where we’re respectful and kind to each other. Integrity in science where we’re rigorous, evidence-based and unflinching. Integrity in our values when we uphold ethical and moral standards. Integrity in our shared purpose of creating a healthier world and advancing human progress. Reputation is your most valuable asset. Integrity is how you keep it safe.”
- Think critically. Award-winning, multi-platinum singer-songwriter John Legend claimed, “Your job is to think critically; to challenge assumptions; to question the status quo; to interrogate conventional wisdom…”
- Harness technology as a force for good. Patrick Gelsinger, CEO of Intel, reflected on the pervasive impact of technology in our daily lives, highlighting the profound influence of artificial intelligence on our experiences. He encouraged graduates to harness technology for the betterment of humanity, envisioning them as superheroes poised to shape innovative solutions yet to be conceived.
- Facilitate opportunities. “We all have the responsibility to liberate others so they can become their best selves in human rights, business, the arts, and in life,” Founder, Chairman and CEO Vista Equity Partners Robert F. Smith said.
- Claim credit and own accountability. Apple CEO Tim Cook advised, “If you want to take credit, first learn to take responsibility.” When you consistently take responsibility for your actions, you are more likely to earn genuine recognition and respect from your peers and workforce.
- Participate in your team. Actor and designer Holly Taylor’s poignant advice during the 2023 Kean University commencement remains unforgettable. Taylor said, “We are all figuring this life thing out together.”
- Ensure every decision matters. Astrophysicist, science communicator, author, and head of the Hayden Planetarium, Neil deGrasse Tyson offered a cosmic perspective on civilization, referencing his latest book, Starry Messenger. He said, “I want to create a world where, if aliens came to visit, they wouldn’t look around and run back home and say, ‘There’s no sign of intelligent life on Earth.’ “
- Take a hint–I mean a mint. Finally, one of the most practical pieces of advice comes from bestselling author Brad Meltzer, “If someone offers you a breath mint, take it.”
2 key takeaways from the article
- The author has attended 30 graduation ceremonies and commencement speeches as a professor, granting her the opportunity to absorb wisdom from eminent individuals every spring. According to her, she has heard her fair share of commencement speeches at her university, and make a point to listen to those from other institutions as well.
- Here are eight valuable lessons she has gleaned for business owners and leaders. Uphold integrity in every aspect of business and life, think critically, Harness technology as a force for good, facilitate opportunities by liberating others so they can become their best selves, If you want to take credit, first learn to take responsibility; We are all figuring this life thing out together; create a world where, if aliens came to visit, they wouldn’t look around and run back home and say, ‘There’s no sign of intelligent life on Earth; If someone offers you a breath mint, take it.
(Copyright lies with the publisher)
Topics: Entrepreneurship, Mentorship, Decision-making, Leadership, Integrity
3 Non-Financial Factors That Could Impact Your Business’ Value
By Jessica Fialkovich | Edited by Maria Bailey | Entrepreneur Magazine | Jun 5, 2024
Extractive Summary of the Article | Read | Listen
Determining a business’ value is not all about adding up revenue and subtracting expenses. While an important piece, these hard numbers are only half the equation for computing what a company is worth. To come up with the true value, we also look at factors like the level of owner involvement, company goals and growth opportunities. When we use the complete equation, we get a comprehensive picture of a business and can better understand the story of its past, present and future. Calculations may vary depending on the company, but in a healthy one, there is about a 50/50 split between the quantitative (financial) and qualitative (non-financial) sides of performance.
For healthy companies that want to maximize their value, the qualitative indicators can be bundled into three main categories.
- The owner’s goals. Significant research shows that if an owner has defined goals and plans for the future that are in line with market expectations for their company’s value, they’re going to have a much stronger exit. What is the owner’s defined goal for exiting the business — to get the most money, to take care of their employees and to ensure a legacy? You must then get to the “why” behind the goals and devise a plan of action. It almost doesn’t matter what the answers to the questions are; having achievable goals and a strategy for reaching them can increase the company’s value because it keeps the owner focused on improving the other areas of the business.
- The owner’s role. The extent of the owner’s involvement is a critical indicator, but perhaps not for the reason you think. The more involved the owner is in day-to-day operations, the more central they are to the business, the less the business will be worth down the road. If the owner is the linchpin that holds everything together, what will happen to the company when they leave? Evaluating operations is more about the system and the structure of the team. Look at the organizational chart and who’s on it – are they good employees or bad employees? Examine the company’s processes and procedures and how new team members are trained and onboarded. The owner sets the vision, but it’s the team that increases company value by carrying out the vision.
- Growth opportunities. Nobody wants to buy a business and keep it exactly as it is. They want to see potential for growth in the future, especially the potential for return on their investment as a buyer. Whether it’s a simple price increase or new locations, whoever buys the business is going to ask about growth opportunities. Indicators like product or service diversification in both the company and the industry it’s in give a good sense of whether the company is moving forward or standing still (and at risk of going backward). The more potential you can show, the more upside there will be for the next owner — adding up to greater value.
2 key takeaways from the article
- Determining a business’ value is not all about adding up revenue and subtracting expenses. While an important piece, these hard numbers are only half the equation for computing what a company is worth. To come up with the true value, we also look at qualitative factors like the level of owner involvement, company goals and growth opportunities. When we use the complete equation, we get a comprehensive picture of a business and can better understand the story of its past, present and future.
- When the qualitative side of the equation is working, it all ties together. The owner knows the goals, which are aligned with where the company is going, and is leading the organization but working themselves out of the day-to-day operations; the business grows and creates more growth opportunities for the next owner. Paired with profitable numbers, it’s a cycle that builds a high-quality business.
(Copyright lies with the publisher)
Topics: Decision-making, Exit Strategy, Entrepreneurship, Strategy, Business Model, Qualitative Measures, Business Performance