Tuesday, December 11, 2012

In praise of The Economist

I read The Economist. I would like to share why this magazine continues to inspire me (excerpt from Wikipedia):

The Economist claims that it "is not a chronicle of economics." Rather, it aims "to take part in a severe contest between intelligence, which presses forward, and an unworthy, timid ignorance obstructing our progress."

And it has done so since 1843.

Saturday, December 8, 2012

Longe-range forecasting: "Exercise in irrelevance"

"Very long-range forecasts from the OECD, a think-tank, may seem an exercise in irrelevance."

Read the rest here.

Friday, December 7, 2012

Core competency driven reinvention

"Why, when so many widget-makers have gone to the wall or been bought up by foreigners, is GKN alive and kicking and British-owned after 253 years?"

The Economist documents the creation of a new business by GKN enabling it to at times preempt and at times work through the downturns like 2009.

"The trick it has mastered is finding new businesses and markets to move into before its established ones run out of steam. “We have been very good at recognising that things don't last forever,” says Nigel Stein, GKN's chief executive since January."

GKN, whose core business is drivelines for automotive industry, is now one of three or four manufacturers in the world who can build a carbon-fibre composite wing spar for passenger jets.

"The aerospace venture might seem to sit awkwardly in a company whose mainstay is selling car parts but Mr Stein says there are “soft synergies” between the two divisions. Both make high-precision kit for a few global firms: it takes the same set of skills to serve and sustain the trust of such demanding customers."

It is a delight to see large corporations comprehending that the same trick does not last for ever.  For me the article highlights three key attributes of companies that last hundreds of years successfully:
  • They know their core competency, continuously challenge it, and grow it into "new" businesses.
  • They do not hesitate from trial and error when they push their core competency into the "new" or even the unknown.
  • They are not risk averse; that is, they are intelligent about where they take risk, they do not jump into business models that everyone is running after, and differentiation, and at time uniqueness remains a driver for the measurement of success.
The best part of such company's as GKN is; they manage Schumpeter's Creative Destruction with finesse!  And deeply understanding their core competency is at the heart to it.

Read the complete article here.

Wednesday, December 5, 2012

Innovation to solve the "CEO disease"

Prakash Dubey forwards the Economist Intelligence Unit report "Cultivating business-led innovation" with the purpose to "explores how senior executives can promote a culture of innovation by empowering different business units", and a blog "The Hunt for Innovation: 10 Strategic Insights" from one of his colleagues at Oracle, Bob Evans, referencing it. The blog begins:

"Ever hear of the dreaded “CEO Disease?”

It was initially diagnosed by Stanford psychologist Carol Dweck, who discovered that the broad power and authority held by CEOs often leads to risk-averse and even truth-averse culture in which employees offer up nothing but “the good news of their perfection and the company’s success, no matter what the warning signs may be.”"

The report is a valuable read, and well done. The complete survey is provided in the appendix.  The report's executive summary lists four key outcomes from the survey:
  1. Effectively capitalising on multiple resources to pursue innovation remains elusive for many companies. The bigger the company, the more likely innovation is to be siloed.

  2. Companies furthest along the innovation path utilise customer data and customer participation in their product and service improvements. Fifty-four percent of respondents in this group actively collect customer feedback and analyse customer data for clues to innovate effectively, but in different ways.

  3. Leading companies make use of disruptive technology trends to either foster innovation or improve business processes. Big data and social media were identiļ¬ed in the survey as offering the most opportunities for companies seeking to innovate effectively.

  4. Many companies have no plan for learning from failed ideas. Nearly half (49%) of respondents said their company had no system to deal positively with failure.

See the complete Economist Intelligence Unit's report here and the blog at Forbes here.

Tuesday, December 4, 2012

Consumers and privacy

A key method of information access for consumers is via a web browser.  The browsers have enabled plethora of data to be connected in forms that can be utilized for analysis.  Interestingly, it is still the wild west on the net when it comes to collecting consumer information.  Though things are changing:

"In December 2010 America's Federal Trade Commission proposed adding a “do not track” (DNT) option to internet browsers, so that users could tell advertisers that they did not want to be followed. Mozilla's Firefox, Microsoft's Internet Explorer and Apple's Safari all offer DNT; Google's Chrome is due to do so this year. In February the FTC and the Digital Advertising Alliance (DAA), a consortium of trade bodies, agreed that the industry would get cracking on responding to DNT requests. In the European Union a new rule requires websites to ask before using “cookies” to gather data about users' behaviour."

Interestingly, Microsoft is starting to take the lead:

"On May 31st Microsoft set off the row. It said that Internet Explorer 10, the version due to appear with Windows 8, a new incarnation of the software firm's operating system, would have DNT as a default."

"Brendon Lynch, Microsoft's chief privacy officer, blogged: “We believe consumers should have more control.” Could it really be that simple?"

Read the complete article on The Economist here.

Monday, December 3, 2012

Infrastructure: State Capitalism

China has been developing infrastructures around the world and engaged in long term contracts for the past fifteen years at least, ones that I am aware of.  Though, it may not be common knowledge that:

"China State Construction & Engineering Corporation (CSCEC), reckoned by International Construction to be the world’s biggest builder, is renovating the Alexander Hamilton Bridge in New York, helping erect a huge tower block in Moscow and creating a massive tourist resort in the Bahamas. China Railway Construction Corporation (CRCC), the second-biggest, is building Mecca’s new metro system."

China is now the player in the global architecture engineering and construction sector.  In some cases, it is also taking on the management of the infrastructure it develops, all the more reason to build it well.

"In July, in one of the first such deals involving a Chinese firm, China Communications Construction (CCC) signed a deal to build a highway in Jamaica and run it for 50 years."

Read the complete article at The Economist here.

Sunday, December 2, 2012

Mexico's engineering talent's economic impact?

The Washington Post reports:

"Mexico is producing graduates in engineering and technology at rates that challenge its international rivals, including its No. 1 trade partner, the United States.  President Felipe Calderon last month boasted that Mexico graduates 130,000 engineers and technicians a year from universities and specialized high schools, more than Canada, Germany or even Brazil, which has nearly twice the population of Mexico."

Does this statistic have a direct correlation with economic growth?  Read the complete article here.

Saturday, December 1, 2012

Economic Straddling

"The scale of border-straddling is colossal.  One Mexican in ten lives in the United States - some 12m people."

I wrote about the productivity gains in the US in the past four years, here.  Though the owner of a manufacturing business concluded, "a factory that Sealed Air opened in Mexico was expected to be far less productive than one in America, but within four years had caught up".

Specifically, looking at Mexico, business rethinking is not occurring rather it is taking place as we speak.  The numbers simply are in favor of Mexico for the US:

"In 2001 Mexican manufacturing wages were four times those in China; now the difference is trivial.  Add in the price of fuel, and it is often as cheap to make things in Monterrey and drive them across the Rio Grande as to make them in Guangdong and ship them across the Pacific.  It is also faster: a Mexican lorry can be in Michigan in a couple of days.  Small wonder that Nissan, Honda, GM, Coca-Cola, DuPont and Eurocopter are rushing to invest South of the border."

Now the question is, is straddling one of the world's largest consumer markets is going to be enough for Mexico, or talent, and its growth within the country will be the differentiation among it's peers in the race to create and deliver goods?

Read the complete article at The Economist here.