Secrets of the world’s best businesspeople

22. January 2016

Date: 22-01-2016
Source: The Economist
Subject: The Gujarati way: Going global

AS BRITISH imperialists were trudging through African jungles to secure their newly conquered empire, some of the empire’s subjects were also roaming far and wide, under the cover of the Union flag. One was Allidina Visram, from Kutch, in what is now Gujarat state in India. He arrived penniless in Zanzibar (now part of Tanzania) on the east African coast in 1863, aged 12. He opened his first small shop 14 years later, and soon afterwards spotted his great opportunity. He opened a store at every large railway station along the 580 miles of railway track being laid down through Kenya to Uganda in the early 1900s, providing supplies to thousands of railway workers. He then opened more stores at Jinja on Lake Victoria.

Flush with success, Visram was later joined by another Gujarati, Vithaldas Haridas. He arrived in 1893 and was, if anything, even more adventurous than his mentor; he stomped 24 miles through the jungle to the small town of Iganga, where he started his own shop. More followed. These were the beginnings of some of the larger fortunes to be made in colonial Africa. Read the rest of this entry »

Managing partners

21. May 2015

Date: 21-05-2015
Source: The Economist: Schumpeter

The pressure on companies to form alliances with rivals is growing inexorably

IN THE run-up to the British election this month, it was taken for granted that politics was entering an age of alliances. No party would win a majority; that much seemed certain. The question was whether the Conservatives or Labour could put together a winning coalition. David Cameron’s surprise victory on May 7th put paid to this talk. But in many industries it is still May 6th: companies are casting around for alliances that can complement their strengths, make up for their defects, hedge their bets, add to their store of knowledge or extend their reach.

There is nothing new about businesses forming either joint ventures (in which they establish jointly owned subsidiaries) or looser alliances. There are ample studies to show how often they have been tried—and how often they have ended in tears. However, despite the difficulties of making partnerships work, firms are under a number of pressures to keep trying.

The first is that, in some industries, the cost of new technologies is so crippling that even the largest companies cannot bear it alone. Carmakers, for example, are having to spend fortunes developing electric, hybrid, hydrogen fuel-cell and other forms of propulsion, while also investing heavily in their petrol and diesel engines as they struggle to meet regulators’ ever-stricter targets for carbon-dioxide emissions. Even Toyota, the world’s largest carmaker, is having to swallow its pride and work with rivals such as BMW on fuel-cell technology. Ford is collaborating with its Detroit arch-rival, GM, on high-efficiency gearboxes. Daimler is increasingly co-operating with a long-standing alliance between Renault and Nissan, into which AvtoVAZ of Russia has also been incorporated. Read the rest of this entry »

McKinsey’s Matt Rogers on the next industrial revolution

1. April 2014

Date: 01-04-2014
Source: Fortune

Rogers’ new book with Stanford Professor Stefan Heck argues that the business world is fast approaching a shortage of valuable natural resources. Here’s what managers need to know.

Matt Rogers of McKinsey & Co.

FORTUNE — Over the next 15 years, another 2.5 billion people in the developing world will join the middle class. China will add 2½ new cities the size of Chicago every year for the foreseeable future and will have 221 cities with over a million in population by 2025 (compared with 35 cities this size in Europe today). That kind of growth is going to create an unprecedented demand for oil, gas, steel, precious metals, water, and other precious resources. If we keep on our current course of consumption, commodity prices, food prices, and pollution levels are likely to spike, greatly increasing risks for business.

In their insightful new book Resource Revolution: How To Capture the Biggest Business Opportunity in a Century McKinsey director Matt Rogers and Stanford Professor Stefan Heck lay out a compelling road map for how managers need to change the way they think about resources if they want to not only survive but also thrive in the 21st Century.

Fortune’s Brian Dumaine caught up with Matt Rogers recently to discuss the book, which will be published on April 1.

The conventional wisdom about resources is that we’re running out, and we’re all going to die. But you believe we’re about to enter what you call a a resource revolution and that it will be the biggest economic opportunity of the 21st century.

Over the next two decades global growth will stress our resources, and that has a lot of people concerned. What gave us confidence to write the book is that we saw that you could combine advances in nanotechnology, materials science, information technology, and biology with traditional industrial technologies and meet resource requirements more easily than most expect. Read the rest of this entry »

The Specialization Myth

31. December 2013

Date: 30-12-2013Hausmann CC
Source: Project Syndicate


Ricardo Hausmann, a former minister of planning of Venezuela and former Chief Economist of the Inter-American Development Bank, is a professor of economics at Harvard University, where he is also Director of the Center for International Development.

CAMBRIDGE – Some ideas are intuitive. Others sound so obvious after they are expressed that it is hard to deny their truth. They are powerful, because they have many nonobvious implications. They put one in a different frame of mind when looking at the world and deciding how to act on it.

One such idea is the notion that cities, regions, and countries should specialize. Because they cannot be good at everything, they must concentrate on what they are best at – that is, on their comparative advantage. They should make a few things very well and exchange them for other goods that are made better elsewhere, thus exploiting the gains from trade. Read the rest of this entry »

A sense of place

26. October 2012

Date: 26-10-2012
Source: The Economist

Geography matters as much as ever, despite the digital revolution, says Patrick Lane

THERE WAS SOMETHING odd about the black car at the junction of Sutter and Hyde Streets. It was an ordinary saloon. Its windows were clear, and it looked in good condition. And yet, as the lights changed and the car pulled away into the bright San Francisco morning, a question remained. Why was it sporting a luxuriant pink moustache at its front?

The moustache is the trade mark of Lyft, a ride-sharing service that began in the city this summer. Its drivers are private individuals who, in effect, rent out seats in their cars for a few dollars a time. Lyft’s cut is 20%. It works through a smartphone app. When you register as a customer, you supply your phone number and credit-card details. When you want a ride, you open the app and see a map with the locations of the nearest moustachioed motors. You tap to request a ride, and the app shows you your driver’s name, his rating by past passengers (out of five stars) and photos of him and his car. He will probably greet you with a friendly fist-bump. Afterwards you rate him and pay through the app. He rates you, too, so if you are poor company you may not get another Lyft. Read the rest of this entry »

The real cost of an iPhone 5: life in the Foxconn factory

13. September 2012

Date: 13-09-2012
Source: The Guardian

An undercover reporter joined thousands on the production line battling to meet deadlines for iPhone 5

Any committed foodie will wax lyrical about the value of provenance – the integrity of the food, the care and craft behind creating it. How long, then, before this middle-class preoccupation with quality, traceability and plain goodness of the things we buy extends into technology?

We suspend our ethics when Apple launches a new phone. That unboxing is a virgin moment, as if the phone morphed inside the box from the tiny sparkling seed implanted by Jonathan Ive. Slide your finger through the  Designed In California seal and your phone takes its first breath…

It’s a supreme piece of packaging design, but the reality is far from an immaculate conception. Foxconn, the Chinese manufacturer of iPhone, has faced a steady stream of criticism and concerns from poor working conditions to suicides.

Now the Shanghai Evening Post has published a detailed diary of working life at the Foxconn production plant by undercover journalist Wang Yu. He lasted 10 days in the plant, seven of which were in training, and three on shifts “marking placement points on the back plate”. Foxconn recruited 20,000 new workers in March to meet its production targets for iPhone 5, and has to produce 57m in one year, Wang’s report stated.

No doubt much of the nuance has been lost in this translation by, (who bafflingly signed off from this piece by saying how excited they were about seeing the new iPhone 5) but Wang complains of having to work on 3,000 phones during a 10-hour shift, paid only 27 yuan ($4.27) for two hours’ overtime. Read the rest of this entry »

Modern supply chains are making it easier for economies to industrialise

8. August 2012

Date: 08-08-2012
Source: The Economist

GETTING rich used to be tough. For most of the past two centuries, few countries managed it. Lant Pritchett, an economist now at Harvard’s Kennedy School of Government, wrote in 1997 that “divergence, big time” between the rich and the rest was “the dominant feature of modern economic history.” But those stubborn gaps have begun to close. Industrialisation is suddenly everywhere. Since the mid-1980s, emerging markets have grown faster than advanced economies (see chart).

Liberal reforms and sound macroeconomic management surely helped. Yet recent research by Richard Baldwin of the Graduate Institute in Geneva suggests it is not so much the developing world that has changed as development itself. Today’s emerging markets face a different sort of globalisation than their predecessors 50 or 100 years ago.

Most advanced economies industrialised as part of what Mr Baldwin calls globalisation’s first great unbundling: the geographical separation of producers and consumers. Early in the industrial era, high transport costs restricted trade. Expensive shipping limited most manufacturers to sales within the same city or country. But as the industrial revolution progressed, steamships and railways slashed transport costs, exposing firms to foreign competition for the first time. The most productive firms were those best able to take advantage of economies of scale. A single large plant could produce goods at a lower unit cost than lots of smaller factories, and a cluster of large suppliers at lower cost still. Production clustered in massive cities in a few economies. Read the rest of this entry »