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 2017 | Week 352 | June 7-13, 2024 | Archive
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How Saudi Aramco plans to win the oil endgame
The Econmomist | June 2, 2024
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As less generously endowed rivals fall by the wayside, Aramco’s market share would be almost certain to rise with a few modest investments in maintaining reservoirs. Yet the company’s employees are busier than ever. That is because Aramco is the linchpin of the strategy of Muhammad bin Salman, Saudi Arabia’s crown prince and de facto ruler, to end his country’s reliance on its oil riches, diversify its economy and decarbonise its energy production.
Aramco is, for a start, the chief source of funds for this vision. On June 2nd it launched a long-awaited secondary share offering, hoping to raise $13bn in exchange for just 0.7% or so of its government-held stock. This followed a record-breaking $30bn initial public offering in 2019. Some of the money will again flow to the Public Investment Fund, the main vehicle for the kingdom’s sovereign wealth.
Yet Aramco is more than just a princely piggy bank. As the kingdom’s most important business, it also has to transform itself in line with the royal strategy. “Our goal is to make our energy source as affordable and sustainable as possible,” says Ahmad al-Khowaiter, Aramco’s head of technology and innovation.
Achieving that goal involves a three-pronged strategy. Its first element is to double down on oil, but to extract it in ever-cleaner ways. Aramco is planning to spend between $48bn and $58bn this year on capital investments. In particular, Aramco is cracking down on methane, the main ingredient of natural gas, which is often produced alongside oil. Recent analysis of satellite data by Kayrros, a French analytics firm, shows that methane intensity from Saudi oil and gas production last year was the second-lowest in the world, behind only greener-than-thou Norway. The second pillar of Aramco’s strategy involves broadening its hydrocarbon portfolio to reduce its exposure to oil, which has historically dominated its production and exports. One area of diversification is natural gas. Because it burns more cleanly than oil or coal, and because the resulting CO2 emissions are more concentrated and thus easier to capture and store. This points to the third pillar of Aramco’s master plan—decarbonisation. The company has turned itself into one of the biggest green investors in the energy world.
2 key takeaways from the article
- As less generously endowed rivals fall by the wayside, Aramco’s market share would be almost certain to rise with a few modest investments in maintaining reservoirs. Yet the company’s employees are busier than ever. That is because Aramco is the linchpin of the strategy of Muhammad bin Salman, Saudi Arabia’s crown prince and de facto ruler, to end his country’s reliance on its oil riches, diversify its economy and decarbonise its energy production.
- Aramco is, for a start, the chief source of funds for this vision. And achieving that goal involves a three-pronged strategy. Its first element is to double down on oil, but to extract it in ever-cleaner ways. The second pillar of Aramco’s strategy involves broadening its hydrocarbon portfolio to reduce its exposure to oil, which has historically dominated its production and exports. And third pillar of Aramco’s master plan is decarbonisation. The company has turned itself into one of the biggest green investors in the energy world.
(Copyright lies with the publisher)
Topics: Energy, Oil, Environment, Sustainable Development
A new future of work: The race to deploy AI and raise skills in Europe and beyond
By Eric Hazan et al., | McKinsey & Company | May 21, 2024
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Amid tightening labor markets and a slowdown in productivity growth, Europe and the United States face shifts in labor demand, spurred by AI and automation. McKinsey’s updated modeling of the future of work finds that demand for workers in STEM-related, healthcare, and other high-skill professions would rise, while demand for occupations such as office workers, production workers, and customer service representatives would decline. By 2030, in a midpoint adoption scenario, up to 30 percent of current hours worked could be automated, accelerated by generative AI (gen AI). Efforts to achieve net-zero emissions, an aging workforce, and growth in e-commerce, as well as infrastructure and technology spending and overall economic growth, could also shift employment demand.
By 2030, Europe could require up to 12 million occupational transitions, double the prepandemic pace. In the United States, required transitions could reach almost 12 million, in line with the prepandemic norm. Both regions navigated even higher levels of labor market shifts at the height of the COVID-19 period, suggesting that they can handle this scale of future job transitions. The pace of occupational change is broadly similar among countries in Europe, although the specific mix reflects their economic variations.
Businesses will need a major skills upgrade. Demand for technological and social and emotional skills could rise as demand for physical and manual and higher cognitive skills stabilizes. Surveyed executives in Europe and the United States expressed a need not only for advanced IT and data analytics but also for critical thinking, creativity, and teaching and training—skills they report as currently being in short supply. Companies plan to focus on retraining workers, more than hiring or subcontracting, to meet skill needs.
Workers with lower wages face challenges of redeployment as demand reweights toward occupations with higher wages in both Europe and the United States. Occupations with lower wages are likely to see reductions in demand, and workers will need to acquire new skills to transition to better-paying work. If that doesn’t happen, there is a risk of a more polarized labor market, with more higher-wage jobs than workers and too many workers for existing lower-wage jobs.
Choices made today could revive productivity growth while creating better societal outcomes. Embracing the path of accelerated technology adoption with proactive worker redeployment could help Europe achieve an annual productivity growth rate of up to 3 percent through 2030. However, slow adoption would limit that to 0.3 percent, closer to today’s level of productivity growth in Western Europe. Slow worker redeployment would leave millions unable to participate productively in the future of work.
The adoption of automation technologies will be decisive in protecting businesses’ competitive advantage in an automation and AI era. To ensure successful deployment at a company level, business leaders can embrace four priorities: Understand the potential. Plan a strategic workforce shift. Prioritize people development. And pursue the executive-education journey on automation technologies.
2 key takeaways from the article
- Amid tightening labor markets and a slowdown in productivity growth, Europe and the United States face shifts in labor demand, spurred by AI and automation. McKinsey’s updated modeling of the future of work finds that demand for workers in STEM-related, healthcare, and other high-skill professions would rise, while demand for occupations such as office workers, production workers, and customer service representatives would decline. By 2030, in a midpoint adoption scenario, up to 30 percent of current hours worked could be automated, accelerated by generative AI (gen AI).
- Some of the key highlights of the report are: By 2030, Europe could require up to 12 million occupational transitions, double the prepandemic pace. In the United States, required transitions could reach almost 12 million, in line with the prepandemic norm. Businesses will need a major skills upgrade. Workers with lower wages face challenges of redeployment as demand reweights toward occupations with higher wages in both Europe and the United States. And choices made today could revive productivity growth while creating better societal outcomes.
(Copyright lies with the publisher)
Topics: Technology, Artificial Intelligence, Productivity
Strategy & Business Model Section
Engineer Your Own Luck
By Mark J. Greeven, Howard Yu, and Jialu Shan | MIT Sloan Management Review | June 05, 2024
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Prediction is hard. The longer the time range — six months, three years, a decade — the less reliable any forecasting becomes. And yet, some companies prosper through extreme uncertainties.
The authors’ ongoing research shows that increased unpredictability and rapidly changing conditions demand that executives strategize at a higher level. Rather than focus solely on products and markets, leaders must develop the ability to discover and act on a company’s options — what is known as optionality — and to scale new initiatives quickly. That will position them to rapidly adjust to unforeseen market shifts.
All successful companies studied by the authors have pursued a particular path to growth. They have modularized internal capabilities into plug-and-play, mix-and-match services that partners and clients can build on to grow new market segments.
Put another way, the top-performing companies, ranked by a composite score the authors call the future readiness indicator, grow by sharing their capabilities with partners that will develop new markets. Consequently, these companies can easily participate in multiple ecosystems, are resilient during difficult times, and are well positioned to capture unexpected upswings and opportunities. By treating capabilities as modular digital services, they can maximize their options for growth and scale quickly. That is how they engineer their own luck.
If attaining optionality and speed is important, why don’t more companies do it? Because it requires grappling with four distinct challenges: (1) identifying core capabilities, (2) codifying relevant process knowledge, (3) breaking down complex, monolithic systems into loosely coupled modules, and (4) exposing interfaces to these modules so that others can harness them to develop new products and services. Overcoming these interrelated challenges requires leaders to be willing to make a long-term commitment and investment.
That commitment, in turn, requires courage, because the early stage of these initiatives are time consuming, can be resource intensive, and may not yield obvious payback aside from some internal productivity gains.
3 key takeaways from the article
- Prediction is hard. The longer the time range — six months, three years, a decade — the less reliable any forecasting becomes. And yet, some companies prosper through extreme uncertainties.
- Increased unpredictability and rapidly changing conditions demand that executives strategize at a higher level. Rather than focus solely on products and markets, leaders must develop the ability to discover and act on a company’s options — what is known as optionality — and to scale new initiatives quickly. That will position them to rapidly adjust to unforeseen market shifts.
- All successful companies studied by the authors have pursued a particular path to growth. They have modularized internal capabilities into plug-and-play, mix-and-match services that partners and clients can build on to grow new market segments. Consequently, these companies can easily participate in multiple ecosystems, are resilient during difficult times, and are well positioned to capture unexpected upswings and opportunities.
(Copyright lies with the publisher)
Topics: Creativity, Strategy, Business Model, Innovation
Only 49 companies have been on the Fortune 500 for all 70 years. Here are their secrets to staying in power
By Geoff Colvin | Fortune Magazine | June 2024 Issue
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Only 0.03% of America’s incorporated companies make to Fortune 500 list, and each one must requalify every year; dozens of them typically don’t. Now, as wFortune publish the 70th annual ranking of the Fortune 500, consider an even more exclusive club within this pantheon of U.S. companies. Of the thousands of firms that have come and gone in the 500 since 1955, only 49 have merited membership in every one of those 70 annual rankings. They are America’s corporate Olympians.
What have these extraordinary 49ers got? An analysis shows that their magic was at work long before the first Fortune 500. The vast majority of them had grown so large by then that they were in the top half of the 1955 ranking. We should note that all of them are manufacturers or oil companies because in 1955 the 500 did not include service companies such as retailers, banks, insurers, utilities, and transportation providers (those industries have been included since 1996).
But that doesn’t entirely explain why the 49ers have survived and thrived through the 70 years since that first 500. The key insight comes from Jim Collins and Jerry Porras, authors of the bestseller Built to Last: Successful Habits of Visionary Companies.
After years of study, Collins and Porras derived several principles for leaders. The most important principle, and a central factor in Fortune’s 49ers’ performance, was to “preserve the core and stimulate progress.” Collins, who later wrote the bestsellers Good to Great and Great by Choice, tells Fortune, “The more I live with it, the more I think it might be the deepest explanatory idea across all the multiple decades of research I’ve had the privilege to be involved in.”
A company’s core, they emphasized, isn’t strategies, structures, technologies, or even culture. Over time, “all that stuff is going to change,” Collins says. The core is a company’s DNA, its reason for being. Collins says he and Porras found that their visionary companies, when seen beside their comparison companies, “had a much deeper allegiance to their core values and a clear sense they had a core purpose beyond just making money.” The virtue of that foundation has attracted much attention in recent years, but it’s hardly new. Some of Fortune’s 49ers adopted it 100 or 200 years ago.
The 49ers are by no means perfect. They didn’t attain their lofty reputations by avoiding bad decisions. That’s impossible. A key factor that sets those companies apart is their superior ability to recover from mistakes.
After 70 years at the apex of industry in the world’s largest economy, what’s ahead for the 49ers? In theory, their performance says they should be able to carry on indefinitely. But in real life, big companies don’t live forever; the 49ers’ impressive longevity suggests they’re living on borrowed time.
They would probably be wise to follow Amazon founder Jeff Bezos’s realist advice. “I predict one day Amazon will fail,” he told an employee meeting in 2018. “Amazon will go bankrupt… We have to try and delay that day for as long as possible.”
3 key takeaways from the article
- Of the thousands of firms that have come and gone in the 500 since 1955, only 49 have merited membership in every one of those 70 annual rankings.
- What have these extraordinary 49ers got? The key insight comes from Jim Collins and Jerry Porras, authors of the bestseller Built to Last: Successful Habits of Visionary Companies. The most important principle, and a central factor in Fortune’s 49ers’ performance, was to “preserve the core and stimulate progress.” The 49ers are by no means perfect. They didn’t attain their lofty reputations by avoiding bad decisions. That’s impossible. A key factor that sets those companies apart is their superior ability to recover from mistakes.
- After 70 years at the apex of industry in the world’s largest economy, what’s ahead for the 49ers? In theory, their performance says they should be able to carry on indefinitely. But in real life, big companies don’t live forever; the 49ers’ impressive longevity suggests they’re living on borrowed time.
(Copyrights lies with the publisher)
Topics: Strategy, Business Model, Fortune 500, Core, Competitive Advantage, Corporate Sustainability, Sustainable Performance, Longevity
Power, Influence, and CEO Succession
By Dan Ciampa and Adam Bryant | Harvard Business Review Magazine | July–August 2024 Issue
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Of all the decisions that a company’s board of directors makes, choosing the next CEO is arguably the most crucial. A failed CEO succession can disrupt employees’ work, cause senior talent to jump ship, damage the company’s reputation, erase enormous value, and ruin the careers and legacies of the outgoing CEO, the board, and the designated successor.
According to research by Claudio Fernández-Aráoz and colleagues, the cost of failed CEO and C-suite successions is close to a trillion dollars annually among the S&P 1500 alone. On average, companies that have to fire their CEOs sacrifice $1.8 billion each in shareholder value, a 2015 study by PwC found.
In theory the key parties in the process would be fully aligned on getting a succession right. In reality, there are multiple agendas at play. When powerful players have diverging agendas, tensions can easily escalate into conflict. The result can be a high-stakes and deeply fraught process that is all about power—who has it, who wants it, and how each party uses it.
That can be disorienting to the successor, especially if she’s a first-time CEO. She probably has been promoted for performing well in straightforward operational or functional roles and consistently exceeding expectations. Success in the top job, in contrast, requires acute awareness of political forces, the wise use of power, and skill at influencing others. Mastering these requirements is crucial for incoming CEOs. To be sure, any new CEO, whether she takes over during a strategic succession, a forced succession, or a planned succession, will need to figure out how to influence others in order to implement her agenda. How new leaders can handle the period of overlap with their predecessors?
The incoming CEO needs to match Influence Styles to the Moment. This could be attained by assertive persuasion, incentives and disincentives, share the common vision, and/or going for openness and involvement.
During the transition phase, the incoming CEO’s main objective should be to make others confident that she is well prepared to take charge. That requires doing four things: learn about the audiences you must influence and about how best to convince and persuade them, consider culture and context; secure the right allies and minimize the impact of opponents, and enhance your power by acting in a humble manner.
When the existing CEO steps down and the successor formally takes office, two additional objectives become paramount: deepen support from the board and clarify and communicate your leadership vision.
3 key takeaways from the article
- Of all the decisions that a company’s board of directors makes, choosing the next CEO is arguably the most crucial. A failed CEO succession can disrupt employees’ work, cause senior talent to jump ship, damage the company’s reputation, erase enormous value, and ruin the careers and legacies of the outgoing CEO, the board, and the designated successor. Success in the top job requires acute awareness of political forces, the wise use of power, and skill at influencing others.
- To be sure, any new CEO needs to figure out how to influence others in order to implement her agenda. This could be possible by matching influence styles to the moment. This could be attained by assertive persuasion, incentives and disincentives, share the common vision, and/or going for openness and involvement.
- During the transition phase, the incoming CEO’s main objective should be to make others confident that she is well-prepared to take charge. That requires doing four things: learn about the audiences you must influence and about how best to convince and persuade them, consider culture and context, secure the right allies and minimize the impact of opponents, and enhance your power by acting in a humble manner.
(Copyright lies with the publisher)
Topics: CEO succession, Board of Directors, Organizational Performance
6 Ways To Recover And Rebuild After A Career Fail
By Tracy Brower | Forbes Magazine | June 11, 2024
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Chances are you’ve had a setback in your career at some point, because few people get through their career unscathed. The experience can be gut-wrenching and it can be tough to know where to turn or how to recover. But whether you’ve been treated unfairly, survived a toxic experience or made your own terrible misstep, you can rebound, repair and rebuild for a brilliant future.
- Reflect. Consider what went wrong, and focus on the factors that were within your control. Give thought to what you could have done differently. Even if it feels like you got a raw deal, lean into the learning you can take away. Remind yourself about your strengths. Make plans to develop new skills or enhance places you might be weak. In addition, take stock of your priorities—and what’s most important to you both personally and professionally. A bump in the road of your career can be a chance to redirect your path.
- Connect. Confide in a close friend or colleague, sharing your concerns. You’ll open the door for them to be transparent as well. And bonding happens when we go through hard times—so you will likely deepen your relationship, just when you most need support and compassion most. Also reach out to your people. Finding your next opportunity will depend on the strength of your network, so let people know you’re on the market and what kind of work you’ll be looking for.
- Stay Optimistic. You don’t want to delude yourself or engage in toxic positivity, but staying optimistic is tremendously healthy. When you are able to accept failure and see it in a positive light, you’re more likely to maintain your happiness and motivation.
- Be Constructive. To be your best and demonstrate a constructive response. You’ll likely want to vent with a close friend or family member—but then be sure you’re managing your emotional responses. The ability to self-regulate is a signal of maturity. Ironically, difficult situations can be important moments to build your credibility. Other people will see that you’re maintaining a positive attitude despite poor treatment, or they’ll notice you’re sustaining momentum despite negative situations. You can be authentic about what you’re going through, but also demonstrate grit, perseverance, a mindset of growth and a proactive stance. All of these will speak volumes about your strength and your character.
- Take Action. Also know that failure can actually lead to greater success. Learning, trying again, sticking with it and building your resilience works for your future achievements. Repeated effort really does result in positive outcomes. Ultimately, when you’re able to keep going and persist—when you persevere—you’ll get to your next career opportunity, and also enhance your mental health.
- Move On. One of the most difficult elements of rebuilding is to let go and move on. You may feel ashamed of your own failure, disoriented by a wrong path—or you may feel angry about what happened. But you’ll be more likely to succeed when you can acknowledge the issues, take a deep breath and keep moving forward. Even if you can’t forgive colleagues, leaders or the company—or even when it’s difficult to forgive yourself—focus on letting go of the weight of your frustrations so you can take positive action. Know that setbacks are part of life—and if you’re not failing sometimes, you’re probably not stretching enough.
2 key takeaways from the article
- Chances are you’ve had a setback in your career at some point, because few people get through their career unscathed. The experience can be gut-wrenching and it can be tough to know where to turn or how to recover. But whether you’ve been treated unfairly, you weren’t at your best, survived a toxic experience or made your own terrible misstep, you can rebound, repair and rebuild for a brilliant future.
- The following can help to recover: Reflect on what went wrong, and focus on the factors that were within your control, confide in a close friend or colleague and share your concerns, stay optimistic, be constructive to demonstrate your best, take actions and move on.
(Copyright lies with the publisher)
Topics: Personal Developmnet, Career Development, Leadership, Failure
5 Keys to Getting Results From People Not Like You
By Martin Zwilling | Inc Magazine | June 12, 2024
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One thing is certain in any business — not everyone you have to deal with will be like you, or will like you (and vice versa). These people may include one of your business partners, an investor, a key vendor, or even one of your best customers. Business professionals must bridge these differences to accomplish shared business goals.
Some of these challenges addressed directly in How to Work With and Lead People Not Like You, by Kelly McDonald, a well-known marketing and communications expert who specializes in multicultural and diversity marketing. She offers a set of strategies and tools for communicating across cultural and other barriers, including people you don’t like:
- Understand that they’re not trying to be difficult. Most people you have to deal with in starting and running a business are just being who they are. They are behaving the way they were socialized — the sum of how they were raised, cultural influences, and the dynamics of previous roles. Don’t let your emotions or theirs impede communication.
- Don’t try to change them.Be civil and diplomatic. People can change themselves, but you can’t change them. Whatever their demeanor is toward you (or your business), remain positive and professional, and treat the other person with courtesy and respect. Do not allow tension to escalate, and your blood pressure and sanity will thank you for it.
- Adjust your expectations that everyone thinks like you. Business people come from different backgrounds and experiences, so don’t expect their behavior and opinions to always mesh with yours. Accept that there are very few absolute rights and wrongs in business, so expect different viewpoints, and don’t allow anyone to push your buttons.
- Focus on the business at hand and getting results. You are there to do a job, and so are they. Successful work relationships don’t have to be rooted in liking each other. Focus on the outcome you are seeking and what you and your counterpart need to do to get there. Success is about cooperation, respect, solving problems, and working together.
- Agree to disagree without being judgmental. Saying “I see it differently” is neither judgmental nor combative, and it doesn’t mean you are trying to “win the argument” or persuade the other person to change their opinion. It diffuses tension and can lead to constructive conversation that allows you and your peers to work together productively.
2 key takeaways from the article
- One thing is certain in any business — not everyone you have to deal with will be like you, or will like you (and vice versa). These people may include one of your business partners, an investor, a key vendor, or even one of your best customers. Business professionals must bridge these differences to accomplish shared business goals.
- Some of these challenges addressed directly in How to Work With and Lead People Not Like You, by Kelly McDonald, a well-known marketing and communications expert who specializes in multicultural and diversity marketing. She offers a set of strategies and tools for communicating across cultural and other barriers, including people you don’t like: understand that they’re not trying to be difficult, don’t try to change them, adjust your expectations that everyone thinks like you, focus on the business at hand and getting results, agree to disagree without being judgmental.
(Copyright lies with the publisher)
Topics: Startups, Organizational Behavior, Entrepreneurship, Organizational Culture, Teams
How to Ensure Value Keeps Flowing to Your Business, No Matter the Circumstances
By Jarrett Preston | Edited by Chelse Brown Entrepreneur magazine | June 12, 2024
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To grow your business, you need to keep value flowing towards you. Value represents many things, including the solutions your product or service offers the marketplace, building relationships and getting paid. The problem is, many factors can limit your ability to continue to receive that value. It’s common, for example, for political climates, environmental disasters and changes in the economy to limit the flow of value to your company. To develop a stronger flow of value to you, implement these strategies.
Develop and incorporate a value-first mindset. The most obvious way of gaining value from others is to be paid. You are selling something from your company, sharing your wisdom, liquidating investments or even gaining an inheritance. People are paying you, and there is an exchange of value for your offer. However, instead of focusing your mindset on receiving value, turn that around. Focus on having a value-first mindset. This means that you lead with the value you offer rather than the value you receive. It’s a game-changer. What’s different is that you’re investing genuinely in how you’re benefiting other people. Instead of pulling every dollar from them, you’re focused on how you can support and help. By proving your value in this simple way, you can become irreplaceable to those who are paying you.
Build your social currency. You’ve heard it many times before. Who you know matters. If you lack a social network for any reason, or your social network isn’t helping you to pull in value in some form, it’s time to make some changes. You need to build your social currency. Relationships matter in many forms. Ask these questions: Who is in your network right now? Who will go to bat for you? Who could those individuals introduce you to that could be valuable to you or them? Who within your network knows someone who might be interested in the latest asset, product or service that you’re selling? There’s immense value in genuine connections. When you build these strong relationships, those people will move mountains to deliver value to the people they care about — and that could be you. To increase the flow of value to you, then, you need to work consistently at building and nurturing these relationships. Take steps to reach out to people, ask for introductions, research who your current network knows, and then go further.
Consider the value of asset trading. Your goal is to build value with others through the products and services or assets that you hold; to do that, you need to minimize leverage and increase the value and benefit of the assets you possess. By trading away those assets that are no longer meeting your goals and expectations, it’s possible to move directly into other assets that offer the objectives and value that you do need. Shift your mindset instead to always consider the trade of currently owned high-value assets for those you desire, and you will very often end up preserving value in ways the traditional sale process may not. This vital and often overlooked skill could be the key differentiator in your business growth and long-term success.
2 key takeaways from the article
- To grow your business, you need to keep value flowing towards you. Value represents many things, including the solutions your product or service offers the marketplace, building relationships and getting paid. The problem is, many factors can limit your ability to continue to receive that value. It’s common, for example, for political climates, environmental disasters and changes in the economy to limit the flow of value to your company.
- To develop a stronger flow of value to you, implement these strategies. Develop and incorporate a value-first mindset. Build your social currency. And Consider the value of asset trading.
(Copyright lies with the publisher)
Topics: Entrepreneurship, Customer Relationship Management, Value
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