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.

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.

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.

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 identified 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.

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.

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.

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.

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.

Advertisement: Stirring emotions to drive behavior

"It is often profitable to stir controversy. An ad that upsets people and thereby generates headlines is an excellent source of free publicity. But if it alienates potential customers, it has gone too far. Benetton, a fashion brand, reels in young shoppers by annoying their parents, for example with a recent ad showing the pope kissing Ahmed al-Tayeb, an Egyptian imam. An edgy image helps sell clothes, but it works less well with cars, as Toyota found with an ad in Australia that mocked both Range Rover and the British queen: “Don't worry, Your Majesty. You're not the only British export that's had its day.” Monarchists howled. Toyota apologised."

Read further how "insult" is leveraged to stir emotions in consumers to drive behaviors in The Economist "Ad Hominem" here.

System Autonomy: Start with automobiles

I believe autonomous systems will probably be the greatest achievement of the 21st century.  A system of systems, based on network of networks, mesh, grid, etc. will power this world by the end of this century.  And I am confident that Quantum Mechanics will have a significant hand in it.

To begin with, Volvo's foray into autonomy of automobiles - from the Wired Autopia blog:

"By 2014, Volvo plans to introduce a new system dubbed Traffic Jam Assistance that will allow the vehicle to be piloted autonomously at speeds up to 30 MPH. At the flick of a switch, the vehicle will be able to steer, brake and accelerate in slow-moving traffic, using a combination of cameras that detect the lines on the road and the vehicle ahead, along with a brace of sensors to keep a safe distance from other road users."

"This latest breed of technology has been born out of Volvo's SARTRE road-train testing program, which allows a densely packed group of vehicles to follow a manned tractor trailer at highway speeds. But that implementation is still several years away, and Volvo is trying to get the technology into vehicles as quickly as possible."

Demonstration of the system below:

Extreme acceleration of innovation: Hackathon

While the entrepreneurs live for speed as at times it is the only weapon they have to be successful, yes, even more so than funding, large corporations due to their various layers find it difficult to comprehend such speed.

It is in the corners of desperation and necessity that gives rise to thinking without boundaries and making the improbable, possible.

Here is an example from the non-profit world.  Non-profit organizations collect data, and at times share data as well.  Yet, they lack the ability to analyze and drive insights from this data as such talent is expensive.  Enter DataKind, a New York based charity:

"A typical DataKind two-day “hackathon” last month in London attracted 50 people who worked in three teams. One pored over the records of Place2Be, which offers counselling to troubled schoolchildren. Crunching the data showed that boys tend to respond better than girls, though girls who lived with only their fathers showed the biggest improvements of all. The charity did not know that."

What is more exciting is:

"The small-talk among the volunteers was of dizzyingly complex statistical and artificial-intelligence techniques. Volunteers included an analyst at Teradata, a data-analytics firm. Around 20 employees attended from Aimia, a firm that mines data from consumer-loyalty programs."

See the article here.

Digital: Protecting the consumer

"Users howled when Microsoft tried to lock down Windows. Now Apple is upping its own security — and everyone loves it."

Thus begins an article in the Wired.  It discusses the topic of control, digital control, that a consumer would like to have on their computational devices.  Microsoft attempted to develop strong security measures for its operating system about ten years ago, that spanned both the software and hardware.  The reaction to locking down of computers resulted in Microsoft pulling back on the initiative it had code named Palladium.

In the same vein, Apple introduced Gatekeeper in its operating system Lion version 10.8.  The loyal Apple consumers approved.

Are you willing to relinquish secure management of your devices?  Read the article here.

"Users will surrender control to avoid malware, spyware, adware, or just plain annoyware."