Extractive summaries curated from TOP TEN BUSINESS MAGAZINES to
promote informed business decision making
Issue/Week 206 – August 20-26, 2021
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Shaping Section : Ideas and forces shaping economies and industries
Chinese cloud giants eye South-East Asia
The Economist | August 21, 2021
China’s technology giants are having a torrid time. At home, a regulatory crackdown is intensifying. In the latest move, on August 17th the authorities released draft antitrust rules that would hurt the business models of titans like Alibaba and Tencent. In the West, meanwhile, governments want to make it harder for Chinese companies to do business in their countries and, in America’s case, to list shares. Some global asset managers are calling Chinese tech stocks “uninvestable”.
The firms are thus casting around for friendlier climes. Foreign markets account for a relatively small share of the Chinese groups’ sales. Tencent made around $5bn in revenues outside mainland China last year, less than 8% of the total. So little of Alibaba’s income is derived from abroad that the company doesn’t bother publishing a geographical breakdown. If it were to start, however, no place would feature more prominently than South-East Asia.
The region is home to nearly 700m people, fast-digitising economies and, crucially, no hardened geopolitical persuasion. Having taken an interest in South-East Asian online darlings such as Lazada (an e-commerce venture majority-owned by Alibaba) or Sea Group (in which Tencent holds a 23% stake), China’s giants are expanding more directly in the region. Last year Alibaba bought half of a 50-storey skyscraper in Singapore, the regional commercial hub. Tencent and ByteDance, the unlisted owner of TikTok, a hit short-video app, have also opened beachhead offices there and set out on local hiring sprees.
Cloud computing presents a particular opportunity. Even before it contributes a big slug of revenues, business activity in South-East Asia is a way to learn what works outside China. The environment is both familiar (with millions of Chinese-speakers, who often dominate commerce) and diverse (with different legal jurisdictions and a wide range of income levels). Asian companies have used the region as a staging post to global conquest in the past, notably Toyota, which began its international expansion in Thailand in 1957. China’s giants would love to follow in its tyre tracks.
3 key takeaways from the article
- China’s technology giants are having a torrid time. At home, a regulatory crackdown is intensifying. In the West, meanwhile, governments want to make it harder for Chinese companies to do business in their countries.
- The firms are thus casting around for friendlier climes. If it were to start, however, no place would feature more prominently than South-East Asia.
- The region is home to nearly 700m people, fast-digitising economies and, crucially, no hardened geopolitical persuasion. China’s giants are expanding more directly in the region.
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Topics: Emerging Economies, China, South-east Asia, Global Economy
Yesterday’s Wars Didn’t Prepare the Pentagon for Tomorrow’s China
Peter Martin and Roxana Tiron | Bloomberg Businessweek | August 2, 2021
President Joe Biden has pledged an era of “extreme competition” with the People’s Republic of China. For the U.S., that means being able to challenge Beijing for the commanding heights of global commerce, to shape the rules around trade and technology, and—if push comes to shove—to fight and win a war with the world’s second-largest economy. The question is how to steer the behemoth U.S. military, which has almost 2 million personnel across six branches, away from the Middle East and terrorism to focus on a new region and different threats, 20 years after the Sept. 11 attacks and the ensuing invasion of Afghanistan.
Washington, however, is often better at articulating grand ambitions than following through on them. That’s especially true of the Pentagon, the world’s largest bureaucracy. The U.S. military’s priorities have been forged by two decades of warfare in the Middle East, and its spending habits are deeply entrenched in congressional politics.
The U.S. military needs to focus its footprint and logistics in the Pacific and to invest in technologies meant to avoid disastrous ground wars and parry China’s incursions: cyber tools, artificial intelligence, satellites, microchips, and autonomous and hypersonic weapons. How well and how fast it can integrate nontraditional technologies “is going to determine whether the United States and its allies can shape the rules of the road in the future,” according to former Undersecretary of Defense for Policy Michèle Flournoy. And those rules “are going to have a huge impact on the trading system, supply chains, and money flows,” not just the military, adds Flournoy, who served in the Obama and Clinton administrations.
Besides belt-tightening and inertia inside the Pentagon, another roadblock is congressional priorities. Trade-offs perennially run into opposition in Congress, where lawmakers are beholden to weapons programs, no matter how old: They mean military bases, skilled manufacturing, and jobs in home districts.
3 key takeaways from the article
- President Joe Biden has pledged an era of “extreme competition” with the People’s Republic of China. For the U.S., that means being able to challenge Beijing for the commanding heights of global commerce, to shape the rules around trade and technology, and—if push comes to shove—to fight and win a war with the world’s second-largest economy.
- The question is how to steer the behemoth U.S. military.
- Washington is often better at articulating grand ambitions than following through on them. That’s especially true of the Pentagon, the world’s largest bureaucracy. The U.S. military’s priorities have been forged by two decades of warfare in the Middle East, and its spending habits are deeply entrenched in congressional politics.
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Topics: China, USA, International Relations
Industry Insights Section: Trends and anomalies shaping an industry
The future of payments in the Middle East
By Jon Chan | McKinsey & Company | August 23, 2021
The payments landscape in the Middle East is heading for an inflection point. Key shifts payments practitioners operating in the Middle East expect to see in the next five years include
- Digital adoption is accelerating. Even before the pandemic, digital payments were growing rapidly. The impressive growth rate has been boosted further by the pandemic. What’s more, payments practitioners expect the shift to digital to be permanent.
- Preferences for payment methods are changing. In a McKinsey consumer survey, 58 percent of Middle East consumers expressed a strong preference for digital payment methods, while only 10 percent strongly preferred cash.
- Nonbanks are poised to capture market share. Banks and bank-backed wallets would win. However, more than 50 percent indicated that big-tech players were best positioned for the future of banks, which emphasizes the threat for banks. These companies’ broad reach and technological prowess give them a strong foundation for competing in a field where the ability to rapidly develop, tailor, and refine customer propositions confers advantage.
- Open banking is looming large. Open banking or “open financial data”—a regulatory reform that requires banks to share customers’ financial data (with their consent) with other banks or authorized financial services providers—is underway in several Middle Eastern countries. These reforms are expected to have broad ramifications for the payments business.
- Payment fees continue to come under pressure. In recent years, payment fees have tended to be either flat or declining. Two-thirds of payments practitioners surveyed say they expect to see declines over the next five years.
- A connected cross-border ecosystem is emerging. Cross-border payments are important in the Middle East, with two of the world’s three largest remittance corridors located in the UAE and Saudi Arabia. They handled $78 billion in payments in 2020,6 equating to 7 percent of the GDP of the two nations combined. Two-thirds of survey respondents (67 percent) said bilateral arrangements between countries for real-time settlement and the scaling up of digital money-transfer operators will be key drivers in cross-border transactions over the next five years.
- Consolidation can be expected. The majority of payments practitioners who took part in the survey predicted some degree of industry consolidation in the next five years. M&A has been a driving force in payments globally for the past decade, and the Middle East could be the next frontier for consolidation among regional providers.
2 key takeaways from the article
- The payments landscape in the Middle East is heading for an inflection point.
- Key shifts payments practitioners operating in the Middle East expect to see in the next five years include: digital adoption is accelerating, preferences for payment methods are changing, nonbanks are poised to capture market share, open banking is looming large, payment fees continue to come under pressure, a connected cross-border ecosystem is emerging and consolidation can be expected.
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Topics: Middle East, Finance, Banking, Telecom, Technology
Leading & Managing Section
Don’t Let Power Corrupt You
By Julie Battilana and Tiziana Casciaro | Harvard Business Review Magazine | September–October 2021 Issue
Having once been wary of power is no guarantee that you are immune to abusing it. We are all susceptible to its intoxicating effects. Essential though power is to taking charge and leading change, it makes you vulnerable to two insidious traps—hubris and self-focus—that can not only erode your own effectiveness but also undermine your team’s. The authors have studied and taught classes in power for two decades and have interviewed more than a hundred people on five continents about how they attained and exercise it. In this article, they offer strategies for recognizing power’s pitfalls and avoiding them.
The Dangers of Hubris and Self-Focus. The perils of hubris—the excessive pride and self-confidence that can come with power—are well-documented. Simply recalling an experience of power can lead people to greatly overestimate their abilities, even to the extent of thinking they can affect a random roll of a die. Research shows that top executives who have experienced and been lauded for success become so overconfident that they’ll pay vastly inflated premiums for acquisitions, especially when board vigilance is lacking.
To effectively exercise power while avoiding its pitfalls, leaders must cultivate humility as an antidote to hubris and empathy as an antidote to self-focus. Those qualities increase openness to learning and altruism—the keys to using power toward a collective purpose that transcends self-interest. Several steps can help you instill humility in yourself and your team.
Make it acceptable—even desirable—to say, “I don’t know”, establish ways to obtain honest input, create visible reminders that success is fleeting or just because you are doing well today doesn’t mean you’ll be around tomorrow, and measure and reward humility.
Cultivating Empathy. Empathy can be encouraged through simple interventions, such as having someone substitute interdependent pronouns (we, ours) when reading a story containing independent pronouns (I, mine). The following actions can foster empathy in yourself and your team: immerse yourself in other people’s jobs, use storytelling to make things personal, embed interdependence in organizational systems, and step out of your company and into the real world.
3 key takeaways from the article
- Even when we exercise power for a noble purpose, we remain vulnerable to its corrosive effects.
- Power makes you vulnerable to two insidious traps—hubris and self-focus—that can not only erode your own effectiveness but also undermine your team’s.
- By cultivating humility and empathy and implementing organizational structures that ensure true power-sharing and accountability, we can avoid the twin pitfalls of hubris and self-focus.
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Topics: Leadership, Power, Teams
Why Modern Executives Are More Susceptible to Hubris Than Ever
By Ben Laker | MIT Sloan Management Review | August 17, 2021
Today’s CEO isn’t just a name and a face; they’re a brand. And they’re encouraging others to be brands too. We’re becoming a society known for what our brand is, not what our character is. And that’s often where hubris — confidence that has morphed into arrogance — begins, as the author’s new book ‘Too Proud to Lead’ concludes.
Unfortunately for recruiters and boards, there may be no sign of hubris when a leader is hired. In fact, hubris may be acquired only as a person grows in their role and ascends the ranks. The higher a leader climbs, the fewer peers they have — which means fewer and fewer people monitor their thinking, decisions, strategies, and actions. It is usually at this point that subordinates become aware that their new leader is developing hubris. But if the leader is too powerful, subordinates may become reluctant to speak up for fear of retribution — which only advances the hubris further.
In climbing the path toward success, most of us develop areas of weakness: a belief that we are capable of anything, a lazy reliance on our go-to strategies, and a dismissive attitude toward unfavorable evidence and contrary advice. It is then that hubris causes a downfall.
But it’s possible to stop hubris in its tracks before it’s too late by reconsidering the yardstick that defines success for you. Perhaps your individual definition of success is motivated by the success of those who you are close to or the fact that your presence is having a positive impact. Alternatively, it could be that you’re happiest when others seek out your opinions, help, or practical insights, indirectly conveying that you are a respected individual in your chosen field. Whatever you choose as a marker of success, remember Rory Vaden’s Rent Axiom: Success is never owned; it is merely rented, and the rent is due every day. What price are you willing to pay for success?
3 key takeaways from the article
- Today’s CEO isn’t just a name and a face; they’re a brand. And they’re encouraging others to be brands too.
- We’re becoming a society known for what our brand is, not what our character is. And that’s often where hubris — confidence that has morphed into arrogance — begins
- It’s possible to stop hubris in its tracks before it’s too late by reconsidering the yardstick that defines success for you.
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Topics: Leadership, Decision-making, Team
Entrepreneurship Section
The Future Of Content Could Be More Interactive
By John Hall | Forbes Magazine | August 25, 2021
Whether you’re working as part of a marketing group or as an individual, creating unique, engaging content is essential to building and sustaining any type of business. The ecosystem of technology to support content creation has never been larger…or harder to figure out. Truth be told, but even highly capable people, most of the times, feel daunted by the sheer vastness of the digital landscape. Just when they think they’ve got a grip on one popular media platform, something new comes along to supplant it. But there’s no need to throw up your hands in despair. All digital content platforms — whether they primarily support written material, images, videos, audio, or something else yet to be invented — are engineered with the same measurements of success. The end product may vary, true, but success always hinges on the following five basic principles.
- Find and tell your unique story. Successful brands don’t succeed by telling people how they are “just like everyone else, only better,” they get traction when they devote themselves to a narrative that differentiates them from everyone else. If your content isn’t telling a unique story, lacks a coherent “big picture” narrative, or is obviously lacking in any form of technical proficiency, nothing else you do will make up for this deficit.
- Strategically distribute your content. Content must be published at the right time, on the right platform, and targeted to the right audience or it is likely to die on the vine. If you’re not using analytics or a specific software solution such that you are supremely confident you know when your primary audience is most likely to engage with content, anything you publish will be akin to taking a shot in the dark.
- Engage winsomely with your audience. It’s not enough to distribute killer content across the right channels and leave it at that, hoping for the best. The most successful brands actively engage with their fans, creating two-way conversations that encourage questions, comments, and observations.
- When appropriate, monetize your content. There are more ways than ever before to directly monetize high-quality, published content. Frequent methodologies include subscriptions, non-fungible tokens, insider tips, and exclusive access to special offers and information. Monetization can take some of the sting out of your production budget by allowing you to capitalize on the work it took to create proprietary content. While it can be tricky to know just when content can be monetized, look for where your referrals are coming from as a jumping-off point.
- Ruthlessly analyze your content engagement. The best content creators use data analytics and feedback loops to measure the impact of their work. Investing time and effort on the post-publication side of things allows businesses to relentlessly tweak and improve every aspect of the content creation and distribution process. Running a postmortem on marketing campaigns can feel like a waste of time and money at first, but knowing what works — and what doesn’t — will save you money over the long haul.
3 key takeaways from the article
- Whether you’re working as part of a marketing group or as an individual, creating unique, engaging content is essential to building and sustaining any type of business.
- Just when you think you got a grip on one popular media platform, something new comes along to supplant it. But there’s no need to throw up your hands in despair. All digital content platforms are engineered with the same measurements of success.
- The end product may vary, true, but success always hinges on the following five basic principles: find and tell your unique story, strategically distribute your content, engage winsomely with your audience, when appropriate, monetize your content, and ruthlessly analyze your content engagement.
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Topics: Digital Platforms, Content Marketing, Social Media
2nd article curated and summarized for this week’s entrepreneurship section is…
5 Things To Consider When Launching a Startup in a Highly Competitive Environment
By Alex Bozhin | Entrepreneur | August 25, 2021
Statistics suggest that most startups will fail. As an entrepreneur, that stat can be frightening, particularly when entering a highly competitive market. Five things to consider when launching a startup in a highly saturated and competitive environment.
- Be disruptive. The most successful tech startups on the market are disruptors. What you will find at the heart of all successful disruptive startups is that they focus on customer needs. Disruption, as such, comes at all scales, and your business doesn’t need to be the next Amazon to be disruptive. Take Happy Socks as an example. The brand became a disruptor by simply designing a new type of colorful patterned socks promoted through creative sales displays, celebrity collaborations and a solid social media presence.
- Develop customer-driven research. The importance of researching your market, competitors, and their customers can never be overstated. But what about gathering insights from the non-customers that your competitors have been unable to convert? From qualitative to quantitative insights, these will be key to helping you deliver on a disruptive product and business model.
- Validate your product in the early development cycle. While understanding customer pain points is key to your product development, one of the most effective ways to gather feedback on your product for your target market is to launch a minimal viable product (MVP). An MVP is a tool that can be used as part of a process to test your assumptions, preventing you from going back to the drawing board over and over.
- Find your purpose. With consumers more purpose-driven than ever before, you must determine your values and purpose and communicate this through your marketing activities. While you may differentiate your product from competitors based on your price point or product quality, consumers will often make purchasing decisions based on the brand they feel more affinity to.
- Be sure to measure your success. Having clear objectives and knowing how to measure your success against your competitors will be essential in understanding whether you are on the path to success.
2 key takeaways from the article
- Statistics suggest that most startups will fail. As an entrepreneur, that stat can be frightening, particularly when entering a highly competitive market.
- Five things to consider when launching a startup in a highly saturated and competitive environment are: be disruptive, develop customer-driven research, validate your product in the early development cycle, find your purpose and be sure to measure your success.
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Topics: Entrepreneurship, Startups, Technology
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