Weekly Business Insights

Exports of goods are familiar. Factories churn out widgets, which are shipped to customers around the world. Yet, improved international connectivity has made various kinds of outsourcing and digital commerce much easier. As a result, service exports have jumped by 60% over the past decade, reaching $7.9trn (7.5% of global GDP) in 2023. The market for physical merchandise is even bigger, at $24trn, but has grown far more slowly, staying flat as a share of GDP.

What does this mean for countries hoping to get rich? Speaking in 2005 Lee Kuan Yew, Singapore’s first prime minister, observed that, “since the industrial revolution, no country has become a major economy without becoming an industrial power.” But since 2005, the world has changed. Manufacturing is now more capital-intensive, making it easier for China to retain its role as the world’s factory. In the past few years, Western countries have embraced industrial policy and protectionism in an attempt to boost domestic manufacturing. Policymakers in emerging markets are arguing about how best to respond.

At present, services are mostly exported by rich countries, where white-collar professionals often work across borders.  But developing economies are starting to make a mark in the more advanced types of services that can be sold overseas. Many countries export audiovisual, computer and telecommunication services.  India is the best-performing Asian country in this category.  The less tech category of “business and trade-related services”, which covers things such as accounting and human resources, is another area of growth. Then there is tourism. Not every country can replicate Japan’s temples or Mexico’s beaches, but many are finding ways to entice visitors, such as with medical services. Dentistry, hip replacements and hair transplants are among the treatments on offer. 

In the short term, it seems likely that service exports will keep growing.  But will service exports raise living standards in the manner of manufacturing?  

In the longer run, AI might cause problems. Models are best at well-defined tasks that do not need in-person context. That makes business services vulnerable. A report by Capital Economics, a consultancy, argues that ai could lead to the “slow demise” of India’s service exports, cutting growth by 0.3-0.4 percentage points a year over the next decade. The spread of communication tech has facilitated services outsourcing. Fresh technological change could, in time, be its undoing.

Governments that want to boost growth will have to focus on different things. Whereas they once had reason to ensure that workers could easily move from farms to factories, today they would be better off paying attention to human capital among future white-collar workers. Getting services right, especially those which can be sold overseas, is now a crucial condition for growth.

The drive to be outside, even in hot weather, is hard to overcome. People without air ­conditioning would be more likely to seek relief at their local park, ­according to Elie Bou-Zeid, a professor of civil and environmental ­engineering at Princeton, than at a government building where they can feel like climate refugees. “It’ll certainly be more pleasant to be in a park than in some indoor stadium where nobody wants to go,” he says. The scientists are combining inexpensive technologies, some novel, some already in use, that they plan to test first in New Jersey for deployment in hot spots like Phoenix.

1. Kirigami.  The art of cutting and folding paper, kirigami is inspiring researchers to design structures that control wind in specific ways. A kirigami structure made from fabric and placed over misters could regulate wind speed to maximize cooling. Or it could form the roof of a pavilion, steering air into the structure.
2. Misters.  They spray small ­water droplets that quickly evaporate, cooling the air. But the effectiveness of misters, which have long been used in cities such as Las Vegas and Phoenix, depends on wind speed. If there’s too little wind, the droplets won’t all evaporate; too much wind and the cooling effects dissipate.
3. Cold Tubes.  A pavilion-like structure is built with panels that contain cold water pipes encased in a membrane that repels humidity. The panels (or “tubes”) draw in heat from the bodies of people standing outside the structure, making them feel cooler without actually cooling the surrounding air.
4. Sun Shades.  Like shades seen at playgrounds, white fabric is stretched over parts of a small or midsize park to provide cover and reflect the sun.
5. Retro-reflective Panels.  Researchers say it’s important to reflect heat from solar radiation away from people and surrounding structures. One solution is retro-reflective coatings that bounce sunlight back toward the sky. In an urban pocket park, retro-reflective wall panels could be attached to nearby buildings. In a larger park, the panels could be affixed to restrooms and other freestanding structures.

Thanks to the boom in artificial intelligence, the world of chips is on the cusp of a huge tidal shift.  Governments, tech giants, and startups alike are racing to carve out their slices of the growing semiconductor pie. Here are four trends to look for in the year ahead that will define what the chips of the future will look like, who will make them, and which new technologies they’ll unlock.

1. CHIPS Acts around the world.  On the outskirts of Phoenix, two of the world’s largest chip manufacturers, TSMC and Intel, are racing to construct campuses in the desert that they hope will become the seats of American chipmaking prowess. One thing the efforts have in common is their funding: in March, President Joe Biden announced $8.5 billion in direct federal funds and $11 billion in loans for Intel’s expansions around the country. Weeks later, another $6.6 billion was announced for TSMC.   The awards are just a portion of the US subsidies pouring into the chips industry via the $280 billion CHIPS and Science Act signed in 2022.  But the US is not the only country trying to onshore some of the chipmaking supply chain. Europe, India and Japan are also in the race – a race initiated by China in 2014 when it annunced heavy subsidies for local chip manufacturing.
2. More AI on the edge.  There’s been a lot of interest and investment in edge computing for AI, where the process of pinging the AI model happens directly on your device, like a laptop or smartphone. With the industry increasingly working toward a future in which AI models know a lot about us there’s a demand for faster “edge” chips that can run models without sharing private data.  If edge chips get small and cheap enough, we’re likely to see even more AI-driven “smart devices” in our homes and workplaces. Today, AI models are mostly constrained to data centers.
3. Big Tech enters the chipmaking fray.  In industries ranging from fast fashion to lawn care, companies are paying exorbitant amounts in computing costs to create and train AI models for their businesses.  That means demand for cloud computing to train those models is through the roof.  The companies providing the bulk of that computing power are Amazon, Microsoft, and Google. For years these tech giants have dreamed of increasing their profit margins by making chips for their data centers in-house rather than buying from companies like Nvidia, a giant with a near monopoly on the most advanced AI training chips and a value larger than the GDP of 183 countries. 
4. Nvidia battles the startups.  Despite Nvidia’s dominance, there is a wave of investment flowing toward startups that aim to outcompete it in certain slices of the chip market of the future. Those startups all promise faster AI training, but they have different ideas about which flashy computing technology will get them there, from quantum to photonics to reversible computation.

The stock market offers daily lessons in animal spirits and, occasionally, something more. Every so often, investors become obsessed with a small group of companies, and clever analysts give them a name that resonates with the investing public. In the ’60s, we had the Nifty 50; in the 2010s, we had the FAANGs; and today we have the Magnificent Seven and the Granolas. The Magnificent Seven are tech companies, by and large: Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla, a tech-forward car company.   The Granolas, a group of European companies, are more varied: GSK, Roche, ASML, Nestlé, Novartis, Novo Nordisk, L’Oréal, LVMH, AstraZeneca, SAP, and Sanofi.

In the authors’ experience, the companies that successfully build these kinds of distinctive capabilities tap six elements:

1. Vision and leadership.  To build a successful superpower, companies need to articulate the value they hope to create, not just next year but ten years from now, and link it to the economics of their business models. The basic question is simple: As the company evolves, can it expect an ever-larger impact from its superpower? Top companies continually expand the capability to maintain a competitive edge.
2. Employees.  Leading companies develop skill-building journeys for people throughout the organization and in that way sustain institutional knowledge—for example, through a corporate academy. These companies see this work as part of a multiyear strategic-workforce plan that outlines talent needs over a period of several years. By considering various factors such as roles, skills, hiring, and reskilling, an organization can ensure it has the right workforce to achieve its long-term vision for the institutional capability.
3. Culture and mindset.  When aspiring to build an institutional capability, organizations often assess their organizational health and take on board the changes needed to reset the culture for experimentation and building. These are typically discrete mindset and behavioral shifts to help employees embrace the new capability in their day-to-day work. Where most organizations fall short is embedding these target mindsets into the backbone of the people structure: the HR processes. By incorporating essential mindsets into hiring, leadership models, and feedback, companies can target moments that matter throughout the end-to-end employee life cycle.
4. Technology.  What companies often fail to appreciate is the challenge of hard-wiring technology into core workflow systems.  Building a superpower without technology is next to impossible; building one with technology that isn’t well integrated into the enterprise is only slightly easier.
5. Organization.  When building an enterprise superpower, organizations should ensure their organizational structures can adapt and scale the capability. Often, companies will revisit their organizational structures and look for opportunities to redesign the teams most directly linked to the institutional capability. A company that’s rewiring one of its functions to build a digital superpower, for example, may also adopt agile structures.
6. Routines.  As part of implementing the other VECTOR components, organizations should redesign essential processes to embed the capability into how the organization operates. What we see is that many companies create nice designs on paper but don’t see them through in practice. To make sure the capability endures, companies need repetition; they may need to run the new process as many as 20 cycles to “burn” it into the organization. This is especially important while building the capability; coaching teams on execution can ensure a long life for the new capability.

There has been a widespread understanding that managing corporate culture is key to business success. Yet few companies articulate their corporate culture in such a way that the words become an organizational reality that guides employee behavior. Which raises the question: If culture eats strategy for breakfast, how should you be cooking it?  Based on his 20 years of experience in research and consultancy the author offers six simple guidelines to help managers who are confronting the challenges of culture building.

1. Build Your Culture Based on Real-World Dilemmas.  One of the biggest mistakes companies make when articulating their desired organizational culture is to focus on abstract absolute positives (integrity, respect, trust, and so on).  When you articulate your culture using absolute positives, it makes a statement, but it’s unlikely to drive the day-to-day decision-making (and therefore the behavior) of your workforce. The trick to making a desired culture come alive is to debate and articulate it using dilemmas. If you identify the tough dilemmas your employees routinely face and clearly state how they should be resolved then your desired culture will take root and influence the behavior of the team.
2. Move Your Culture from Abstraction to Action.  If you are building your culture from scratch, debate it using dilemmas from the beginning. But if you already have a stated culture consisting of abstract principles in place, “dilemma-test” them to determine whether they are actionable enough to be useful in real decision-making situations.
3. Paint Your Culture in Full Color.  Once you have identified a clear set of values and dilemma-tested them, articulate your desired culture using concrete, colorful images to get the values to stick. Research on the picture superiority effect (PSE) shows that images lodge themselves in our memories in a way abstract words don’t. One way to put color into your organizational culture is to articulate it in an edgy, counterintuitive way. Be provocative, and your employees will remember. 
4. Hire the Right People, and They Will Build the Right Culture.  If you hire people whose personalities don’t align with your culture, no matter what else you get right, you are unlikely to get the desired behavior. When defining company culture, first tackle whom you will hire.  Next, look at whom you will fire. 
5. Make Sure that Culture Drives Strategy.  Many companies define their culture by focusing on employee attitudes.  Attitude is critical, and you should address it. But what’s most important is to identify your strategic objective—whether it is to reduce costs, minimize business complexity, or scale up through mergers—and use dilemmas to ensure that your employees understand what decisions they should be making to move the business in the right direction.  
6. Don’t Be a Purist.  Of course, there will be times when the culture you’ve articulated should not (or cannot) be followed. When you debate your organizational culture, also identify dilemmas in which your stated values do not apply. Be bold and push the culture to the limit, but also define which situations are over the limit.

Executives often resist engaging employees in strategic planning due to fear of losing control and speed. A participative approach takes more time and is more complicated. However, excluding employees from strategic planning may hinder strategy adoption and overlook valuable input.  We need a new and fresh playbook for strategic planning — one that breaks from tradition and actively loops in employees. Let’s explore why and examine four keys to doing this well.

1. Bring the human touch.  Develop a simple, coherent strategy and align the operating model to deliver on this strategy, simplifying the organizational structure.  Appreciate the genuine collaboration. And we need to learn to lead with vulnerability, sharing doubts and reaching out to others for support while also investing time in building trust and understanding within teams. That included developing the content of the strategy while investing in collaboration.
2. Engage employees in a genuine way.  An organization’s approach to engaging employees in strategic planning should align with its DNA — its version of “how we do things.”  To engage employees effectively, companies should make the strategy relevant to their personal ambitions and daily work. Clarify the benefits for people, and address any concerns that affect their interests. Hubert Joly, formerly the CEO of Best Buy, emphasized linking employees’ dreams and motivations to the company’s purpose and strategy — a move that was instrumental in the company’s successful turnaround.
3. Plan slowly for fast delivery.   Detailing plans marks the transition from developing a strategy to human beings actually delivering on it. In this step, the number of people involved grows exponentially, and the strategic project’s scope and deliverables become concrete. This shift can revive fundamental strategic debates with the people who will be involved in the delivery. Although facilitating these debates requires time and a process, leaders must mobilize the employees involved in execution in order to take strategy beyond documents and workshops.
4. Learn and adapt.  Once the strategy is in full execution mode, some rigidity in strategic choices is a good thing. Consistency in choices is essential for human engagement. Still, consistency shouldn’t hold leaders back from fine-tuning to make the choices work.  Strategic planning is ongoing work that requires flexibility and learning. It also requires experimentation, honest reflection, and frequent pivots. During implementation, insights emerge regarding what works and what doesn’t. New external developments may emerge that require a strategic response, so the organization must continually adapt the strategy.

Successful strategic planning goes beyond making the right choices — it’s about putting your people at the heart of it.

Peter Latta, the 67-year-old CEO and third-generation owner of West Chester, Pennsylvania-based transportation and logistics provider A. Duie Pyle, was just 12 years old when he first tried his hand at the family business.  “That very first day, the shop leader asked me to fuel up the truck that was by two fuel dispensers,” Latta tells Entrepreneur. “I went out and figured out how to fill up the truck, and he ambled over and said, ‘Son, do you know the difference between diesel fuel and gasoline?’ And I said, ‘Uh, no.’ And he said, ‘Well, you just put the wrong fuel in the truck.'”  Despite the rough start, Latta would go on to learn all the ins and outs of his grandfather Alexander Duie Pyle’s now-100-year-old company and help steer it through some significant periods of growth.

The story begins with the purchase of a used truck in 1924; Alexander Duie Pyle drove the vehicle, and his wife Mary Ellen, Latta’s grandmother, was the small operation’s bookkeeper and dispatcher.  Today, Pyle, which serves the Northeast with extended coverage through partnerships in the Southeast, Midwest and Canada, boasts more than 4,300 employees and is on track to see $850 million in revenue this year.

As impressive as Pyle’s footprint and revenue are now, it had to navigate some major challenges — and take advantage of certain opportunities — to become the success it is today.

According to Latta, Pyle’s key to a successful century in business “has really been the engagement of the Pyle people, which I always attribute to the six core values [empathy, candor, citizenship, service first, integrity and profitability]. As we embrace those, all the people in the Pyle team create a very healthy culture, and from that culture comes trust.”

“From that linkage between core values, culture and trust comes a term I like to use — ‘discretionary effort,’ which is the over and above effort,” Latta says. “Our secret sauce has been our composite discretionary effort of the Pyle people. At the end of the day, we live in a service world. Trucks, trailers, facilities, technology are all tools of the trade, just like a saw and a hammer are to a carpenter. But it’s the people using the tools and their discretionary effort that determine where we rank relative to competition.”

Few companies have benefited as much from the generative AI boom as Microsoft. Investor fervor for the technology has helped make Nadella’s company a perennial contender for the title of the world’s most valuable corporation, with a market cap that consistently bobs somewhere in excess of $3 trillion. 

When Nadella took the reins at Microsoft in 2014, the company was floundering. Under his predecessor, Steve Ballmer, it had missed the smartphone revolution, was lagging on tablets, and was even losing market share in the PC operating system business that made it a household name. Microsoft’s shares had fallen more than 40% during Ballmer’s tenure. In 10-plus years as CEO, Nadella has reinvigorated the company, successfully steering it through two technological transformations: from PCs to the era of cloud computing, and now, to the age of AI. Nadella’s prescient and early bet on OpenAI and its technology, and the fruitful-if-sometimes-tense relationship that ensued, have given Microsoft as good a shot as any company at supremacy in this new era. The company arguably hasn’t been this powerful since it dominated the PC market in the 1990s’ “Wintel” era.  

But as Nadella begins his second decade at the helm, there’s no guarantee Microsoft will retain its lead. Regulators, hackers, and rivals each present threats serious enough to potentially undermine its industry leadership. Above all, it must reckon with its own leviathan size—and avoid becoming a victim of bureaucracy and bloat when AI’s protean nature calls for speed, agility and finesse.

Nadella’s approach to leadership reflects his acute awareness of these risks. Even when seemingly ahead of the pack on AI, he and his team are constantly listening, their corporate antennae sensitive to the tiniest pivots in users’ needs and preferences. Microsoft is continually investing in technologies and talent that might someday supplant OpenAI’s models—or even supplant generative AI altogether. In other sectors, such hypervigilance might seem like overkill, even paranoia. But as Nadella knows as well as anyone, in tech, platform shifts happen frequently and fast. Blink for a second too long and you’re chasing the future, not making it. 

It helps explain why investors love Microsoft—it looks like a no-lose bet. (Its share price has risen 11-fold under Nadella.) “Microsoft’s growth prospects are pretty straightforward,” Nadella says. “Just do a good job of what we do.” But, of course, “just doing what we do,” isn’t simple. There are a thousand ways a colossus like Microsoft can lose its way. It has before—it largely missed mobile, after all. And of the three big technological innovations Nadella famously said in 2017 would shape Microsoft’s future—AI, quantum computing, and mixed reality—the company has really only hit the jackpot with AI. 

Nadella says the idea of missing the next big technological leap keeps him up at night. “When the paradigm shifts, do you have something to contribute?” he asks. “Because there is no God-given right to exist if you don’t have anything relevant.” That in turn, he says, requires “a culture that allows you to build capability long before it is conventional wisdom that you need that, to come up with new concepts.” 

Nadella says build. But find might be more accurate. For an executive who spent nearly his entire career at Microsoft, Nadella is surprisingly willing to go outside the organization to obtain the innovation on which the company’s future depends—whether through acquisitions, partnerships, or hiring. 

This whatever-it-takes attitude makes Microsoft a formidable competitor. But it may not be enough to ensure it remains the world’s most valuable company. Staying on top requires that Microsoft continue meeting “unmet, unarticulated needs of customers.” That in turn demands that the company “stay humble, stay hungry, and exhibit a growth mindset.” The company can never coast. “I don’t take it for granted,” Nadela says. 

A VC friend told the author he estimates the average age of the entrepreneurs who pitch him is somewhere around 25, if only because most of the most valuable tech companies were launched by young entrepreneurs.

For many, the father of the Taiwanese semiconductor industry, Morris Chang, is the exception that proves the rule: Chang was 55 when he founded the now $700 billion Taiwan Semiconductor Manufacturing Company.  Yet he was hardly an exception. A study conducted by the Census Bureau and two MIT professors found the most successful entrepreneurs tend to be middle-aged, even in the technology sector. 

After compiling a list of 2.7 million company founders who hired at least one employee between 2007 and 2014, researchers found the average age of those who founded the most successful tech companies was 45 years.  In general terms, a 50-year-old entrepreneur was almost twice as likely to start an extremely successful company as a 30-year-old. A 60-year-old startup founder was three times more likely to launch a successful startup than a 30-year-old startup founder and nearly twice as likely to have launched a startup that ranks in the top 0.1 percent (in terms of revenue) of all companies. 

Makes sense. Ideas are great, but execution is everything — and it’s much harder to execute well when you have limited experience.  That’s especially true when leadership experience is a factor. I can have a groundbreaking idea, but if I don’t have the skills needed to turn a collection of individuals into a team, I’ll probably fail.  But there’s a deeper reason. People who succeed at a young age tend to make conceptual breakthroughs. Like Bill Gates and his “computer on every desk and in every home.” Like Bezos and his “everything store.”  While Gates and Bezos didn’t have the skills to run multibillion-dollar companies, they did have breakthrough ideas and then they developed the necessary skills. 

Contrast that with people who start companies later in life. Most build on skills, knowledge, and experience they’ve gained.  Chang worked his way up the corporate ladder to become a vice president at Texas Instruments. Ray Kroc held a number of sales jobs before purchasing McDonald’s when he was 52. 

If you truly make a conceptual breakthrough, you may be able to be wildly successful at a young age. Most of the time, though, older entrepreneurs have a decided advantage.  While ideas matter, especially genuinely breakthrough ideas, execution almost always matters more.  Research shows age isn’t a competitive disadvantage; instead, your experience, skills, connections, and expertise are what will make you successful.  As long as you put those attributes — attributes you’ve earned — to work for you.

Once a company is up and running successfully, and is ready to scale, one strategy to keep the business relevant in the current marketplace or boost sales is to find ways to expand and diversify the client base.

Networking with brand champions or highlighting the success stories of current customers are good places to start building on the next chapter of your business plan. 14 experts from Forbes Business Development Council provide business leaders with additional examples of how to diversify their clientele, and why these are some of the best ways to keep a business growing.

1. Be Empathetic And Innovative.  To effectively broaden and diversify your client base, use empathy and innovation. This means understanding clients’ needs and offering them tailored solutions to address their problems. Also, remember that less is more—prioritize quality over quantity when targeting new clients. 
2. License Your Brand.  Brand licensing is a great way to diversify a client base. Licensing allows brands to move to new, adjacent product categories and services. Therefore, company brands can capitalize on existing customers and move them into new revenue opportunities, while at the same time leveraging brand familiarity to gain new, additional customers.
3. Hire A Diverse Team With Different Perspectives.  In management consulting, clients often request a diverse team who also represent the diverse world around them, steering clear of the cookie-cutter format that may have served you well 20 years ago. 
4. Be Open To Learning About Other Industries.  The best way to diversify your client base is through strategic partnerships and networking in varied industries. It exposes your business to new markets and audiences, leveraging partners’ credibility and customer bases. By aligning with companies in different sectors, you can cross-promote services and tap into previously inaccessible customer segments, enhancing market reach and resilience. 
5. Engage Directly With Customers To Understand Their Needs.  Provide comprehensive solutions that boost productivity and efficiency by deeply understanding and addressing market demands. Engaging directly with customers, collecting feedback and monitoring industry trends allows us to create effective solutions that meet genuine needs and drive growth.
6. Develop Services And Products That Are Relatable.  Building services or products for a varied customer base is the key to attracting a diverse set of clients. Your product and services need to stay relevant to multiple industries or functions from a positioning perspective.
7. Create A Comprehensive Referral Program.  Diversify your client base by building a comprehensive referral program with your customer success teams and tapping into new segments. 
8. Bridge New And Existing Customers Through Their Similarities.  Diversification can occur in several dimensions—geography, industry and scope. To be effective at ensuring diversification is to find a “critical mass” of similarities and orthogonality between new and existing customers.
9. Seek Out Clients With Diverse Portfolios.  The real work starts when you need to provide them with a compelling reason why there are synergies between you and them. From there, you can build an alignment strategy and model that will target the core values of diversity and uniqueness.
10. Retain A Mix Of Small- And Large-Revenue Clients.  Expanding and diversifying your client base by targeting a mix of small- and large-revenue clients reduces dependency on a few key accounts, enhancing financial stability. This approach mitigates risks, as losing one small client won’t significantly impact overall revenue, ensuring a more resilient and sustainable business model. It’s a strategic way to protect and gradually increase revenue streams.
11. Highlight The Success Stories Of Your Current Clients.  Leverage your existing client base as an asset to expand and diversify your client base. Sharing success stories and results of how your current clients have achieved measurable outcomes and business results from doing business with you can go a long way to establishing your credibility. 
12. Host Industry Events As An Expert In Your Field
13. Network With Brand Champions Who Support Your Cause
14. Strategize A Robust Digital Marketing Plan