Informed i’s Weekly Business Insights

Critics accused Donald Trump of being too chaotic to get much done. The speed of his first appointments should disabuse them. The next administration means business.  Stock and corporate-bond markets are broadly delighted with the prospect of deregulation and tax cuts in a second Trump term. The Economist, by contrast, has warned of a risk that mass deportation and a global trade war would do real harm. The appointments themselves attest to Mr Trump’s desire for disruption, a hard line on China and absolute loyalty . With such a concatenation of signals, you may wonder what is about to hit the world economy.

The answer comes in three instalments, beginning with Mr Trump’s intentions. His commitment to deregulation may be good for growth. Elon Musk, the world’s richest man, and Vivek Ramaswamy, an entrepreneur-politician, have been named heads of a new outfit grandly named the Department of Government Efficiency, or DOGE. A pledge to cut $2trn from the government’s annual budget is patently absurd, but judicious liberalisation could be benign. Mr Trump has also promised to free up artificial intelligence. The technology is immensely power-hungry. Just imagine if easier planning rules helped unleash a revolution.  Unfortunately, Mr Trump also wants to deport millions of irregular migrants and impose tariffs of up to 60% on China and 10-20% on the rest of the world. All of these would be bad for growth. 

A second part of the answer is that the tensions in Mr Trump’s agenda will be resolved by necessity, as the hyperbole of stump speeches comes into contact with the messy reality of governing. Policies take so much effort to enact that his administration will simply be unable to do everything all at once.

The third part of the answer is that, mixed in with the intentions and priorities is the mercurial temperament of Mr Trump himself. He has a fondness for picking favourites and then dumping them. He is also beholden to nobody. In spite of his appointment to the White House of Stephen Miller, a longtime loyalist and a hardliner on immigration, Mr Trump may put growth first by making a furious noise about deportation, but limiting its real-world effect. It is the same with Mr Musk, whom markets sense may receive special favours. But will the bromance last? The only discipline on a president who has succeeded so spectacularly by defying the experts around him will be those same markets. Mr Trump has an old-fashioned regard for share prices as a barometer of success.

The conclusion markets seem to be drawing is that things will work out just fine. Although they are alive to risks of inflation and cronyism, investors are betting that tariffs and deportations will do little damage. Instead, the tax cuts will produce a sugar rush that boosts corporate profits and deregulation will bring about lasting growth.

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Geopolitical conditions have always influenced companies’ fortunes, but at least since the end of the Cold War, they’ve tended to take a back seat to macroeconomic, strategic, and operational concerns.  No longer.

Business leaders today view geopolitical tensions as the biggest risk to economic growth, according to the latest McKinsey Global Survey on economic conditions. Regional conflicts and international trade divergences have intensified in recent years, testing the resilience and strategies of multinational corporations. For instance, tariffs on goods exchanged between the United States and China have increased up to six times since 2017, and globally, trade interventions have surged 12-fold since 2010.

CEOs and boards understand that a shift in the global order is under way.  However, many have yet to grapple with an important implication: these geopolitical shifts present not only risks to mitigate but also opportunities to seize.  Given their fiduciary responsibilities, business leaders understandably tend to focus primarily on the downsides of such shifts

It is important to craft risk and response plans to address those and other potential downsides. But even as they improve their resilience to shocks, business leaders should focus on opportunities for risk-adjusted value creation. They should consider tailoring their growth strategies, core business operations, technology stacks, talent footprints, capital asset portfolios, and organizational capabilities with an eye toward thriving and not just surviving.

Ten key value drivers that leaders should explore in the wake of geo-politics risks are:  trade agreements; import and export controls; domestic, environmental, labor and immigration policies; tariffs and other trade barriers; domestic industrial policies; foreign investment restrictions; sanctions, embargoes, and restricted lists; multilateral cooperation and alliances; conflicts; and technology, intellectual property, and cyber security controls.

Many management teams and boards have made a point of aligning their corporate strategies and capabilities with realities on the ground. They have appointed a chief geopolitical officer, set up geopolitical intelligence units to provide early warning of emerging events, developed response plans to empower CEOs in times of crisis, and protected their supply chains from external shocks.  A few advanced leadership teams are taking the next step, however, and exploring ways to create value amid geopolitical disruption. They are finding opportunities in three areas in particular—accelerating growth, optimizing business operations, and developing capabilities and strategies to address global disruption.

It’s one thing for a business executive to be informed about the potential upsides and downsides of geopolitics. It’s another thing entirely for the organization to have the capabilities required to respond to them—including corporate strategies that take geopolitics into account, building a dedicated geopolitical functional group, establishing a crisis response playbook, and capital structures that are sensitive to geopolitical realities.

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Selling cold, sugary beverages to middle and high schoolers wasn’t exactly the original vision when Schultz opened his first coffeehouse, Il Giornale, modeled after Milan’s espresso bars, in 1985. But he eventually discovered that catering to the tastes of the American masses would require veering further and further away from that quaint concept. While the vast majority of customers today are adults, Starbucks Corp. also sells a whole lot of sugar and caffeine to tweens and teens. What was begun reluctantly has evolved into a concerted effort to court young people that permeates product development and marketing in a strategic effort to create lifelong customers. 

Chains such as McDonald’s Corp. have long drawn the ire of public-health advocates for using cartoonish mascots and cheap plastic toys to lure families with young children into consuming high-sugar, high-calorie foods. But Starbucks, which now has more US locations than the Golden Arches, has eschewed some of the more overt techniques and has aimed slightly older, allowing it to mostly bypass such criticism, even as it’s morphed from a coveted third space for upper-middle-class professionals into a teen emporium. In recent years, Starbucks executives boasted that Gen Z had the highest “brand love” for the coffee chain of any cohort. 

Starbucks said it doesn’t share what percentage of its sales are attributable to customers under 18, but the menu is increasingly catering to Gen Z. Cold drinks, which are generally favored by younger customers, according to Starbucks, have consistently accounted for about 70% of the chain’s beverage sales for at least the last three years. 

Meanwhile, Starbucks is struggling to attract adults who are balking at $6 lattes. That’s as it tries to appease an activist investor, conduct contract negotiations with unionized workers, quell boycotts about its perceived stance in the Middle East and revive its business in China. And for those busy grown-ups who are just fine with $6 lattes, the company can’t seem to serve them up fast enough, with instances of 20-plus-minute wait times. In August, met with an overall decline in sales—a situation so rare it’s only happened during two periods in the past 30 years, during the 2008 financial crisis and the pandemic—the company ousted its latest CEO in favor of Brian Niccol, who’s turned around Chipotle Mexican Grill Inc. and Taco Bell in recent years.

Niccol is now faced with the challenge that has dogged Starbucks for decades: mapping out its future as both an oasis filled with the aromas of Veranda blonde roast and a one-stop shop for kaleidoscopic liquid fun, a place where rowdy teens can gather after school without alienating the grown-ups. Plenty is riding on how he navigates that.

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Agility—the ability to quickly react to rapid change—is all the rage in strategy circles these days. Its popularity is rooted in the belief that organizations must constantly respond to technological advances, new market dynamics, shifting consumer preferences, and other external developments. That sounds like a sensible proposition, but in practice continual strategic adaptation is almost impossible to pull off, because the business environment is evolving so fast that firms can’t keep up. The consequences for those that try to are stark:  Erosion of competitive advantages, Strategic myopia, and organizational chaos.

So what can firms do to avoid these problems?  Jeff Bezos, the founder of Amazon, once made an interesting observation: “I very frequently get the question: ‘What’s going to change in the next 10 years?’… I almost never get the question: ‘What’s not going to change in the next 10 years?’ And I submit to you that that second question is actually the more important of the two—because you can build a business strategy around the things that are stable in time.”  

Bezos’s philosophy underscores the importance of understanding and catering to fundamental consumer needs that are consistent over time, rather than getting caught up in the transient trends that businesses often chase. By focusing on the strategic constants, Amazon can confidently invest in infrastructure, technology, and processes that cater to unchanging customer desires, ensuring that any investment made today will continue to contribute to the company’s success for many years to come.

This is a classic example of strategic constancy, which requires a firm to maintain a steadfast focus on a long-term vision even as it navigates a dynamic business environment. It’s about recognizing the enduring aspects of a company’s business model—its core values, customer relationships, brand identity, and key competencies—and remaining committed to them despite external pressures. It emphasizes depth over breadth—deepening the company’s competitive advantage in its core areas rather than spreading efforts over many. Because it ensures continuity in an organization’s vision, it also facilitates more-reliable strategic planning and execution.

Strategic constants are few in number.   Some strategic constants may seem intuitive.  In contrast to strategic constants, transient factors are abundant, stemming from fluctuating and often unpredictable market trends, regulatory shifts, and technological changes.  The impact of transient factors is temporary, and their low predictability creates challenges for strategic planning. Understanding these distinctions is crucial for businesses.

How to use a focus on strategic constants to build a company that consistently outperforms rivals throughout upturns and downturns:  adopt future-back thinking,  identify strategic constants, match constants to capabilities, and adapt around the constants.

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Becoming a unicorn is no easy feat, but leading one?  That’s an entirely different challenge.  In 2023, the number of global unicorns surpassed 1,250—a testament to the growing influence of startups disrupting industries worldwide.  But behind every story of fundraising success we read on the news is a CEO navigating the weighty responsibility that comes with a billion-dollar valuation.

One of the key lessons from the experiences of leaders in this space is that unicorn CEOs face unique challenges in three particular areas:

1. Leaders of Unicorns See What Others Don’t, and Often Bank Their Whole Company on It.  The ability to spot an opportunity that others miss is often what sets unicorn founders apart. In fact, it might be the entire job requirement.  Having a vision isn’t all that rare, but having the conviction and commitment to act on it is, particularly when there’s little external validation. For the vast majority of unicorn CEOs, the journey has almost invariably begun by trusting themselves and their team when others won’t.
2. Managing the Pressures of Leading a Unicorn.  As valuations grow, so do the expectations of investors, employees, and the market alike, and crossing the billion-dollar mark brings with it pressures most CEOs never get to experience.  It is almost poetic how the very thing that most CEOs are trying to accomplish quickly becomes simply another challenge to overcome.  The pressure unicorn CEOs are subjected to go much deeper than meeting financial goals or keeping investors happy. In fact, for many the greatest source of pressure resides within, stemming deep from the CEOs ambitions to accomplish more even after having hit a status as mythical as the day Aileen Lee coined the term.
3. Where Does One Even Go After Hitting Unicorn Status?  Becoming a unicorn isn’t the end of the story.  On the contrary, it’s just the beginning for both the company and its leadership.  As the company scales and grows so too must the CEOs. In most cases, this means stepping away from the granular, hands-on approach that might have driven early success and learning to lead larger, more complex organizations.  This change is far from painless, and the process itself is equally far from obvious.

The key to sustaining growth lies not just in scaling the business but in scaling their own leadership as unicorn leader.  This is why leading a unicorn is not a destination—it’s a constant journey of adaptation, pressure, and growth.

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As artificial intelligence technologies develop, managers are striving to reap the benefits. Today’s generative AI tools can aid managers in strategic decision-making and assist with problem-solving in a variety of contexts, ranging from product development to employee conflicts. ChatGPT — a common GenAI tool — is even being used as a debating partner for managerial decision-making processes.

At the same time, interacting with technology as part of a decision-making or problem-solving process is fundamentally different from consulting with humans. AI systems, by design, are focused on efficiency, predictability, and data-driven solutions. This emphasis is where leaders can get into unintended trouble.

In their latest research the authors’ suggests that when managers interact with GenAI tools to help make decisions, the tools may inadvertently nudge them toward a more rigid and mechanistic approach. Specifically, their study reveals that when managers used ChatGPT to assist with solving a problem related to employee behavior and working conditions, they were more likely to propose control-oriented rather than people-oriented solutions.

For decades, researchers and managerial practitioners have detailed the benefits of human-centric management approaches. Research findings caution that without proper consideration, the use of generative AI tools may risk an unintended return to a more mechanistic and control-based management style.  That’s a problem, since research has established that the old command-and-control style of management doesn’t breed employee engagement or trust.

Consider these key managerial takeaways from the authors’ work:

1. Beware the priming effect of generative AI tools.  Consulting with the GenAI tool shifted managers’ attention away from direct experience and human-centric thinking and primed them to use a more detached and analytical mode of thinking.  Leaders should actively acknowledge the priming that could occur when enlisting generative AI as a problem-solving “partner” in human-centric challenges. When using GenAI for decision support in people management, they should adopt a decision framework that actively incorporates employee welfare and humanistic factors.
2. Understand that generative AI tools can breed moral disengagement.  Our results indicate that it is possible that GenAI’s data-driven nature may lead managers to view employees more as data points than individuals with unique needs and circumstances.  Keep the humans in the loop: Managers should regularly engage with employees and seek their input in order to balance GenAI-driven suggestions with insights from employees’ real-world experiences.
3. When using generative AI tools, overemphasize transparency.  When organizations leave employees in the dark about how AI systems judge their performance, determine their schedules, or adjust their working conditions, leaders may foster an environment of mistrust and thus experience unintended consequences.  Leaders should implement clear communication and disclosure policies regarding when and how GenAI is being used and what data is being considered in managerial decisions.

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Rebranding is not about discarding everything, but about taking stock, making purposeful changes, and positioning yourself for where you want to go next.

Before diving into colors, logos, and messaging, the most important question to ask is: Why are you rebranding? Without a clear purpose, your rebrand can fall flat or even damage the company’s image.  Some common reasons to rebrand include: Target a new audience, business evolution, Reputation management, and competition and differentiation.  In any of these cases, having a clear reason for rebranding will guide your decisions and ensure you stay on track. Here are six considerations for your rebranding.

1. Rebrand for the customers you want.  One key to rebranding success is understanding that you’re not rebranding for the customers you currently have—you’re rebranding for the customers you want. This mindset shift is crucial. If your company is starting to resonate with a specific generation or demographic, rebranding can be the perfect opportunity to refine your messaging and push toward them.
2. Don’t survey your current customers.  Asking current customers what they think about your rebrand can backfire, as their feedback is likely to pull you back toward what they’re already familiar with.  A rebrand is often about moving forward and making changes that will appeal to a new audience or take your company in a fresh direction. So trust your vision and your market research, and focus on what will drive your business toward your future goals.
3. Streamline decision making.  Limit the number of decision makers involved in the rebrand. This team should include people who understand the brand, the company’s goals, and the target audience’s needs. With fewer voices at the table, you’ll have a clearer direction and a faster path to launching the new brand.
4. Keep the core values intact.  While rebranding is often about change, it’s essential to keep your company’s core values intact. What makes your brand unique should still shine through, even in its new form. The trick is to refresh your image without losing the essence of what has made your business successful.  So that your rebrand feels like a natural evolution, not a complete departure.
5. The visual elements.  The visuals should be a reflection of your rebrand’s strategic goals.  That said, it’s important to ensure that your new visuals communicate your company’s new direction and resonate with your target audience. Keep the design consistent with the message you want to convey.
6. The rollout: Introduce the new brand.  Once the hard work is done and your new brand is ready to go, it’s time to plan your rollout. A successful rebrand doesn’t happen overnight; it requires careful planning and communication with your audience. Consider creating a timeline that allows for a gradual transition, easing customers into the new look and feel.

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The percentage of people working primarily from home has nearly tripled globally, from 10% in 2019 to 28% in 2023. Online freelance work is also the most popular holiday side hustle, with 66% of Americans indicating they plan to pursue it this season.  What exactly are employers looking for from remote hires? A new study from SEO agency Search Logistics used data from LinkedIn, Upwork and Glassdoor to find the most in-demand skills among employers.

“It’s unsurprising that teamwork, problem-solving, leadership skills and customer service are in the top 10,” Search Logistics lead director Matthew Woodward says. “These skills are useful in basically every industry or position you could think of, so if you’re stuck on how to improve your job performance, building your proficiency in any of these skills is a great place to start.”

1. Teamwork.  Category (according to Upwork): Admin Support.  Demand percentage (using LinkedIn): 49.98%.  Average annual salary (from Glassdoor): $116,000
2. Analytical thinking.  Category (according to Upwork): Engineering and Architecture.  Demand percentage (using LinkedIn): 37.24%.  Average annual salary (from Glassdoor): $62,000
3. Software development.  Category (according to Upwork): IT & Network Admin.  Demand percentage (using LinkedIn): 31.47%.  Average annual salary (from Glassdoor): $131,000
4. Problem-solving skills.  Category (according to Upwork): Sales and Marketing.  Demand percentage (using LinkedIn): 29.04%.  Average annual salary (from Glassdoor): $59,000
5. Java, Java Script.  Category (according to Upwork): IT & Network Admin.  Demand percentage (using LinkedIn): 21.73%.  Average annual salary (from Glassdoor): $122,000
6. SQL, Python.  Category (according to Upwork): IT & Network Admin.  Demand percentage (using LinkedIn): 19.05%.  Average annual salary (from Glassdoor): $116,000
7. Data analysis.  Category (according to Upwork): Data Science and Analysis.  Demand percentage (using LinkedIn): 18.57%.  Average annual salary (from Glassdoor): $109,000
8. Leadership skills.  Category (according to Upwork): Admin Support.  Demand percentage (using LinkedIn): 15.16%.  Average annual salary (from Glassdoor): $117,000
9. Sales.  Category (according to Upwork): Sales and Marketing.  Demand percentage (using LinkedIn): 13.52%.  Average annual salary (from Glassdoor): $149,000
10. Customer service.  Category (according to Upwork): Customer Service.  Demand percentage (using LinkedIn): 13.24%.  Average annual salary (from Glassdoor): $44,000