Extractive summaries curated from TOP TEN BUSINESS MAGAZINES to promote informed decision making
Week 198 | June 25-July 1, 2021
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Shaping: Ideas and forces shaping economies and industries
Closing the world’s schools caused children great harm
The Economist | June 24, 2021
A new look at how corporations impact the economy and households
By Manyika et al., | McKinsey Global Institute | May 31, 2021
Amazon, Walmart Learn to Live With Indian Stores, Not Kill Them
By Saritha Rai | Bloomberg Businessweek | June 23, 2021
Leading & Managing
Why Do So Many Strategies Fail?
By David J. Collis | Harvard Business Review | From the Magazine (July–August 2021)
How to Win at the Platform Game
By Barry D. Libert | MIT Sloan Management Review | June 23, 2021
Entrepreneurship
Four Keys To Product-Led Growth And Business Freemium Success
By Matt Holleran | Forbes | June 29, 2021
6 Things Every Small Business Needs to Know About Ransomware Attacks
By Amrita Khalid | Inc | June 25, 2021
Social Media Seems Like the ‘Holy Grail,’ But This Marketing Strategy Is Even More Important
By Laura Perkes | Entrepreneur | June 29, 2021
Executive Summaries of Articles
Closing the world’s schools caused children great harm
The Economist | June 24, 2021
Covid-19 rarely makes children very ill. In the year to April the chance of an American aged 5-14 catching and dying from the virus was about one in 500,000—roughly a tenth of a child’s chance of dying in a traffic accident in normal times. Yet schools around the world have been wholly or partly closed for about two-thirds of an academic year because of the pandemic.
As a result, young brains are being starved of stimulation. Primary-school pupils in England are around three months behind where they normally would be; children in Ethiopia learned 60-70% less than usual during 2020. Even before the pandemic things were bad. More than half of ten-year-olds in low- and middle-income countries could not read a simple paragraph. The World Bank warns this could rise to almost two-thirds. In all countries school closures will widen the gap between better-off pupils (who have a full stomach, encouraging parents, iPads and quiet bedrooms for remote learning) and worse-off ones (who often don’t). The disruption caused by covid-19 also creates a chance to make schools better than they were before. For instance, the experience of remote schooling has given teachers a crash course in educational technology.
Alas, too few governments are doing even a bare minimum to make up for time lost. Only 2% of the money ploughed into covid-19 relief packages last year went to education. The UN has found that by last autumn only a quarter of children had access to some kind of remedial programme. Two-thirds of poor countries have cut education spending. Money is not everything, but even in good times the poorest spend only $48 a year for each schoolchild, which is not enough. (Rich countries spend $8,500.) The UN predicts that foreign aid for education will fall by 12% between 2018 and 2022. Governments are often tempted to neglect education. Improving schools costs money, and may require confronting powerful interest groups, such as teachers’ unions. The benefits may not come until after today’s politicians have left office.
However, almost nothing matters more for a good life tomorrow than a good education today.
3 key takeaways from the article
- Covid-19 rarely makes children very ill. Yet schools around the world have been wholly or partly closed for about two-thirds of an academic year because of the pandemic.
- In all countries school closures will widen the gap between better-off pupils (who have iPads and quiet bedrooms for remote learning) and worse-off ones (who often don’t).
- Too few governments are doing even a bare minimum to make up for time lost.
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Topics: COVID-19, Children Education
A new look at how corporations impact the economy and households
By Manyika et al., | McKinsey Global Institute | May 31, 2021
The role of companies in the economy and their responsibilities to stakeholders and society at large has become a major topic of debate. Yet there is little clarity or consensus about how the business activity of companies impacts the economy and society. In this discussion paper, the first in a series on companies in the 21st century, the authors assess how the economic value that companies create flows to households in the 37 OECD countries, and how these flows have shifted over the past 25 years. The authors identify patterns in what different types of companies do and how they do it, and how the mix of these companies and their patterns of economic impact have changed.
A starting point for our research is the steady contribution of business to the economy. Among OECD economies, business activity – the value added from businesses of any size or formality including corporations, partnerships, and sole proprietorships – accounts for 72 percent of GDP. The remainder comes mainly from government, non-profit activity, and household incomes from real estate. Measured in GDP per capita, the contribution of the entire business sector has tripled since 1960 on average in major OECD economies, in proportion with their overall economic growth. Companies underpin 85 percent of technology investment and 85 percent of labor productivity growth since 1995, a larger proportion than their GDP contribution.
Among the eight pathways i.e., labor income, capital income, taxes, investment in capital assets, payments to suppliers, consumer surplus, and negative and positive spillovers, of corporations’ contributions to the economy and the household, labor income is the largest direct pathway, with wages and benefits accounting for $0.25 of each dollar of revenue. Just over half, $0.58 on every dollar, goes to suppliers (themselves companies large and small), reflecting the role they play in enabling corporations to create and deliver their products and services. The other significant pathway is consumer surplus, which we estimate to be about $0.40 per dollar of revenue. These pathways have changed over the past 25 years.
Based on the companies’ factor inputs (for example, labor and both physical and intangible capital), how they create economic value (for example, cost structure and R&D spending), and their relative impacts on the economy via the eight pathways, the authors also clustered the large corporations into eight archetypes: Discoverers, Technologists, Experts, Deliverers, Makers, Builders, Fuelers, and Financiers.
3 key takeaways from the discussion paper
- The role of companies in the economy and their responsibilities to stakeholders and society at large has become a major topic of debate. Yet there is little clarity or consensus about how the business activity of companies impacts the economy and society.
- The authors assess how the economic value that companies create flows to households in the 37 OECD countries, and how these flows have shifted over the past 25 years.
- Business activity, including that of corporations, continues to be the dominant contributor to the economy and its growth – remained true over the past quarter-century (and longer).
(Copyrights)Topics: Businesses, Consumers, Government
Amazon, Walmart Learn to Live With Indian Stores, Not Kill Them
By Saritha Rai | Bloomberg Businessweek | June 23, 2021
India’s 20 million mom and pop stores, called kiranas, have been fixtures in the country’s retail landscape for decades. In much of the world, small merchants have been driven out of business by huge retailers such as Walmart Inc. and Amazon.com Inc. But kiranas remain an integral part of retailing in India—accounting for 90% of the country’s consumer purchases, they helped the nation’s 1.3 billion people stock up on essentials during a devastating coronavirus wave in April and May. And the tiny stores are emerging as key partners for Amazon, Mukesh Ambani’s Reliance Industries, and Walmart’s Flipkart online unit as they seek to dominate the lucrative $1 trillion Indian retail market.
What these hole-in-the-wall shops have that the global mega-merchants lack is an extensive network in India’s vast hinterland. The e-tailing giants are eager to expand beyond selling electronics and fashion online into India’s mammoth food and grocery segment, where less than 1% of sales have moved online, according to Forrester Research. To make that shift, they’re counting on wooing bulk orders from kiranas, as well as striking deals to provide credit services or use the stores as fulfillment centers.
Shopkeepers who once had no more than a calculator and a telephone to handle business now use apps supplied by the e-commerce giants to compare prices, replenish stock, manage inventory, and cater to customers. After dealing for decades with a fragmented supply chain of hundreds of distributors that offered costly credit, tiny Indian grocers are spoiled for choice.
Forrester Research estimates Indian e-commerce sales will reach $111 billion by 2024, nearly doubling from $60 billion in 2020. Nevertheless, one challenge the giants will have to contend with is India’s slow pace of adopting technology. The nation’s online sales of $33 billion in the year ended March 2021 was only a tiny fraction of China’s $1.5 trillion, estimated by the China Internet Network Information Center. And another challenge they have to face is the courtship between the e-commerce giants and the kiranas hasn’t always been smooth.
3 key takeaways from the article
- India’s 20 million mom and pop stores, called kiranas, have been fixtures in the country’s retail landscape for decades.
- In much of the world, small merchants have been driven out of business by huge retailers such as Walmart Inc. and Amazon.com Inc.
- In India, global e-commerce giants want to partner with the small fry to gain access to their huge customer base.
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Topics: India, Retailing, Digital Economy
Why Do So Many Strategies Fail?
By David J. Collis | Harvard Business Review | From the Magazine (July–August 2021)
All too often strategy failures occur because the CEOs’ approach to strategy isn’t holistic. At many innovative new businesses, CEOs excel at identifying ways to generate value by addressing unmet customer needs—yet don’t adequately analyze what it would take to capture a sufficient portion of that value. Or they get seduced by the initial success of their new business models, grow too fast, broaden their firms’ scope too far, and neglect to invest in capabilities needed to sustain a long-term competitive advantage. Leaders of traditional corporations tend to make different mistakes: Some underestimate how much new technologies and business models can increase the value provided to customers. Others align their operations with their distinctive market position so tightly that they can’t adapt when customers’ tastes change. These leaders either ignore some components of what the author calls the complete strategy landscape or don’t recognize the interdependencies among them.
Today a complete strategy has to encompass carefully coordinated choices about the business model with the highest potential to create value. To do that, the organizations have to take the following five actions:
- Identify opportunities. This involves continually taking stock of what’s happening in the outside world—developments in technology, demographics, culture, geopolitics, disease, and so on that are the current “hot topics.” These changes and trends open up possibilities for firms to exploit.
- Define the best way to tap a given opportunity. To translate an opportunity into strategy, CEOs need to develop a business model that maximizes the potential value of their offering. The model should describe the “job to be done” for customers, which affects their willingness to pay for the product or service and the size of its possible market. The model should also spell out the configuration of the assets that will be used to produce and deliver the offering (and that determine the cost of doing so), and the monetization method, or how all this will be paid for.
- Realize value over time. To keep capturing value, a firm needs to constantly adapt how it implements its strategy—adjusting its activities and building new capabilities as the external environment changes.
- Build a foundation for long-term success. The firm’s strategic choices and its interaction with competitors ultimately determine its financial performance and, critically, the resources it has to build assets and capabilities that support future moves.
3 key takeaways from the article
- Strategy has always been about aligning the organization behind a clear direction.
- Today’s strategy must be broadened to become an integrated set of choices about the business model, competitive positioning, and capabilities required for long-term success.
- By managing the complete strategy landscape, CEOs of young ventures will greatly increase the odds that their firms won’t crash and burn, and leaders of established companies will ensure that they continually renew themselves.
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Topics: Strategy, Leadership, Change
How to Win at the Platform Game
By Barry D. Libert | MIT Sloan Management Review | June 23, 2021
Most businesses understand the superior value of business models built around subscription-based software as a service (SaaS) and models built around marketplaces that join together many buyers and sellers. Few, however, understand the exponential growth and value that comes when both of those strategies are combined with data and machine learning models.
But the opportunity to integrate these three strategic elements is becoming a critical business imperative. Companies today compete with one another for human capital (customers, partners, and employees) and financial capital (debt and equity investors). Growth stocks have outperformed value stocks since 2008, a reality that has accelerated during the pandemic. Investors are reallocating more of their capital to growth companies to align with a shift in consumer buying patterns (for example, from Regal Cinemas to Netflix). These facts reinforce the “grow or die” mindset — especially for companies that want to access the best talent, customers, suppliers, and investors.
Some business models are better at this than others. Manufacturing and distribution are capital intensive, while financial and professional services are capital inefficient. SaaS and platforms, on the other hand, are capital light, with platforms even better by this measure than SaaS. Building a platform business model with (1) subscription revenues with a large user base, (2) a robust marketplace of sellers, and (3) machine learning models based on data has become the best business model for the modern world, offering the most capital-efficient model on the planet.
In addition, putting these three components together creates a reinforcing loop that results in network effects that are scalable, extendable, and protectable. Software and subscription services power the on-ramp of customer buying (think Netflix, and search on Amazon), seller and partner marketplaces drive engagement (Shopify, Apple’s App Store, and Airbnb), and machine learning improves recommendation accuracy and outcomes (Match.com and Spotify) with data from interactions and transactions generating insights that feed every facet. Individually, each element can offer significant benefits. But the real breakthrough is in combining all three. The author recommends the three steps to pursue this business model: implement subscription software, create a large marketplace of sellers and use machine learning and data generated from your SaaS on-ramp and marketplace.
2 key takeaways from the article
- Most of the businesses understand the superior value of business models built around subscription-based software as a service (SaaS) and models built around marketplaces that join together many buyers and sellers.
- Few, however, understand the exponential growth and value that comes when both of those strategies are combined with data and machine learning models.
(Copyrights)Topics: Digital Economy, Business Model, Platform, Strategy
Four Keys To Product-Led Growth And Business Freemium Success
By Matt Holleran | Forbes | June 29, 2021
Business freemium companies offer their basic solution free of charge to attract individual users, then rely on those users to drive the adoption and proliferation throughout the users’ organization. As the product becomes embedded in the organization, it’s then possible to sell more feature-rich options for an increased monthly or yearly subscription fee over time. There are massive opportunities for business freemium/product-led growth startups in today’s market. To illustrate the inputs for success, the author shared four key reasons business freemium and product-led growth companies reach the top of their industries.
- The product should be simple, beautiful and hassle-free. Business development leaders should keep in mind that an experience that is self-service, guided by product tours and marketing automation can be impactful.
- The product is inherently viral. The best business freemium/product-led growth companies jump from a single user to a group within the same company. As you move up the chain, one plus one plus one doesn’t equal three. It equals much more because users are collaborating, the product is getting integrated into the workflow, and you can analyze information across users. Even better, your product can spread from users at one company to users at other companies. Your service is stickier and your value proposition is greater, so you can start to charge more per user and continue to increase prices over time.
- The product has a long runway. It’s essential to keep building your product by adding valuable features as you grow from individual users to entire companies. A long product runway means customers can always do more with your software/service and will pay more over time because they’re always getting greater value.
- You can keep a close eye on customer usage. Business freemium/product-led growth is inherently a mass-market strategy. To achieve efficiencies of scale, data science and marketing automation is a big part of the growth function. Successful companies will do a terrific job of programmatically monitoring usage patterns and strategically nurturing the right customers at the right moment to upsell them to higher-value editions at higher price points per user.
2 key takeaways from the article
- Business freemium companies offer their basic solution free of charge to attract individual users, then rely on those users to drive the adoption and proliferation throughout the users’ organization.
- Four key reasons business freemium and product-led growth companies reach the top of their industries are: the product should be simple, beautiful and hassle-free, the product is inherently viral, the product has a long runway, and you can keep a close eye on customer usage.
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Topics: Entrepreneurship, Digital Economy, Platform Economy
6 Things Every Small Business Needs to Know About Ransomware Attacks
By Amrita Khalid | Inc | June 25, 2021
It’s tempting to think the average cyber extortionist has bigger fish to fry than your small business. But while they may receive less attention, 50 to 70 percent of ransomware attacks are aimed at small and medium-sized companies. And changes in business practices, accelerated by the pandemic, have left small businesses even more vulnerable. There are, however, some simple methods that can help.
- Every industry is vulnerable. No target has proved too small for hackers, who are constantly on the hunt for new opportunities.
- Always remember to back up. If you have really good backups in place, you are not as impacted. But don’t count on being able to return to normal right away–even companies with backup systems aren’t safe. Increasingly, thieves have been targeting backup systems, as well as entire devices.
- Don’t forget to secure your remote workers. You should make sure your remote workers are trained to spot phishing attempts, use two-factor authentication, and download the most recent updates of security software.
- Have a plan of action for a ransomware attack. Who will your company contact once it suspects a ransomware attack? How will you get the word out to employees and clients? Where are all the backups located? What happens if the hacker already found the backups? Ideally, to address these questions you should perform tabletop exercises, or a real-time simulation of a ransomware attack, so you’re not flying blind if your data is intercepted.
- You’re almost guaranteed to lose some of your data. So although every situation is different, experts typically urge businesses not to give in to hackers’ demands. The best advice is to prepare for such attacks in advance and prevent them from happening.
- Don’t count on law enforcement to recover ransomware payments. Nearly 98 percent of ransomware payments are made in Bitcoin, because traditionally it’s been hard for authorities to track. That appears to be changing: After Colonial Pipeline paid approximately $4.4 million to hacker group DarkSide to regain access to its systems, the FBI was able to recover roughly $2 million of that sum. Still, experts caution against placing too much faith in the feds to track stolen funds.
3 key takeaways from the article
- They may receive less attention, 50 to 70 percent of ransomware attacks are aimed at small and medium-sized companies.
- Small businesses are attractive targets because they typically lack the budget and resources to prevent, identify, respond to, and recover from threats.
- Some simple methods that can help are: we need to understand every industry is vulnerable, always remember to back up, don’t forget to secure your remote workers, have a plan of action for a ransomware attack, you’re almost guaranteed to lose some of your data and don’t count on law enforcement to recover ransomware payments.
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Topics: Cyber security, Small Businesses
Social Media Seems Like the ‘Holy Grail,’ But This Marketing Strategy Is Even More Important
By Laura Perkes | Entrepreneur | June 29, 2021
For many entrepreneurs and startup businesses, social media seems like the Holy Grail. Yet there’s a missing piece of the puzzle here. A modality that’s as old as time, but a powerful force when it comes to sharing messages, raising brand awareness and building on the know-like-trust factor. And that’s public relations. Everything you say and do is PR. Public Relations is the practice of deliberately managing the release and spread of information between an individual or organisation and the public, in order to affect the public perception.
So, essentially, everything you say and do is PR, but the platform in which you share your message changes. Now, there is way more choice when it comes to gaining exposure, so while you may not consider social media, YouTube or podcasts your typical media outlets, they’re still consumed by your ideal clients, still covering topics that complement what you do, and they still have a ready-made audience of loyal fans that you could (and should) be tapping into. How? Quite simply, by pitching.
The way you’d pitch yourself to a podcast host (or recording your podcast by yourself) is the exact same way that you’d pitch yourself to a journalist. That is a PR tactic and a skill that publicists have been honing for decades. Now, one of the utterly brilliant, yet often overlooked, powers of PR is that you can take one piece of content and deliver it to millions of people in one go. No other form of communication enables you to do that. It may take time to build and execute your PR plan. You may not see anything published or broadcast for three to four months, but when it lands, it’s well worth the wait, as your content has the potential to be seen or heard by hundreds of thousands, if not millions, of potential ideal clients and customers. This is another reason why PR is such a powerful and influential tool — because what you do now is searchable forever.
3 key takeaways from the article
- For many entrepreneurs and startup businesses, social media seems like the Holy Grail. Yet there’s a missing piece of the puzzle here.
- A modality that’s as old as time, but a powerful force when it comes to sharing messages, raising brand awareness and building on the know-like-trust factor. And that’s public relations.
- One of the utterly brilliant, yet often overlooked, powers of PR is that you can take one piece of content (could be in the form of a podcast) and deliver it to millions of people in one go through social media.
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Topics: Entrepreneurship, Public Relations, Branding