17. June 2016
Source: The Economist: Schumpeter
Chief finance officers are amassing a worrying amount of power
THE days of imperial CEOs have long gone. Today’s chief executives do their best to contain their egos and, instead, project a modest image. They talk about “servant leadership” and make a point of cultivating their “stakeholders”. Many bosses leave the limelight to company founders and big-name investors. And yet a new authority figure has emerged within companies, much less exuberant than old-fashioned autocratic CEOs but just as determined to amass power: the imperial CFO.
Chief financial officers barely existed 50 years ago: company accounts were administered by mysterious people called “comptrollers”. Today, CFOs are at the heart of all the world’s big firms. They are the only corporate officers other than the boss who are able to monitor every corner of an organisation. They are the only executive other than the chief who is feared by everybody: a “no” from the CFO means that your precious project is dead. Russell Reynolds, a search firm, calls them “co-pilots”. At one high-profile company, Twitter, the CFO, Anthony Noto, is arguably doing most of the piloting. Read the rest of this entry »
11. October 2015
Source: Fortune january 2015, Ram Charan
Get ready for the most sweeping business change since the Industrial Revolution.
The single greatest instrument of change in today’s business world, and the one that is creating major uncertainties for an ever-growing universe of companies, is the advancement of mathematical algorithms and their related sophisticated software. Never before has so much artificial mental power been available to so many—power to deconstruct and predict patterns and changes in everything from consumer behavior to the maintenance requirements and operating lifetimes of industrial machinery. In combination with other technological factors—including broadband mobility, sensors, and vastly increased data-crunching capacity—algorithms are dramatically changing both the structure of the global economy and the nature of business.
Though still in its infancy, the use of algorithms has already become an engine of creative destruction in the business world, fracturing time-tested business models and implementing dazzling new ones. The effects are most visible so far in retailing, creating new and highly interactive relationships between businesses and their customers, and making it possible for giant corporations to deal with customers as individuals. At Macy’s, for instance, algorithmic technology is helping fuse the online and the in-store experience, enabling a shopper to compare clothes online, try something on at the store, order it online, and return it in person. Algorithms help determine whether to pull inventory from a fulfillment center or a nearby store, while location-based technologies let companies target offers to specific consumers while they are shopping in stores. Read the rest of this entry »
23. August 2015
The harsh workplace that a New York Times story recently described plaguing Amazon represents an old-fashioned business model that will almost certainly disappear soon.
This week, a New York Times profile of Amazon’s treatment of employees has provoked a debate about the future of the workplace.
The article claims that Amazon’s professional employees are well paid and work on world-changing projects, but are pushed to the breaking point in a survival-of-the-fittest climate where they tend to burn out and leave quickly.
Readers, including Amazon CEO Jeff Bezos, say they are appalled by the anecdotes of insensitivity in the Times report. But the controversy has raised the possibility that the underlying business model portrayed in the article is legitimate or perhaps inevitable. The Times article quotes an ex-Amazon employee who says CEO Jeff Bezos has envisioned a “new workplace: fluid but tough, with employees staying only a short time and employers demanding the maximum.” Read the rest of this entry »
18. April 2015
Source: The Economist
Subject: Management theory: Survival of the fittest
THE MODERN THEORY of the firm is the theory of the public company: obsessed with questions such as transaction costs but blind to questions of transmitting wealth to future generations. In numerical terms, this emphasis on the public company is clearly a mistake. Its triumph is limited to the Anglo-Saxon world. The economies of most of the rest of the world—developed as well as emerging—continue to be dominated by family-focused businesses that control a wide range of companies, not just individual firms.
It is also out of date. Talk of the triumph of the Anglo-American public company might have made sense in the post-war era when the British empire still had a glow and the American Century was in full swing (though family companies continued to flourish in both countries). It makes far less sense in an increasingly integrated Europe and in rapidly emerging markets. The world’s fastest-growing region, Asia, is dominated by powerful business houses run by families. Though some of these could no doubt benefit from more focus, a significant number are Schumpeterian entrepreneurs destined for success, thanks to a rare combination of risk-taking and long-termism. Read the rest of this entry »
15. March 2015
YES, THERE IS A DIFFERENCE BETWEEN MANAGING AND LEADING, AND UNDERSTANDING IT CAN ONLY SERVE YOU, YOUR BUSINESS, AND YOUR EMPLOYEES WELL.
Do you think leadership and management mean the same thing? If you do, keep reading—knowing the difference will make your job more fun, boost your staff’s morale, and could even make you more money.
The mistake many entrepreneurs make as their companies grow is focusing on how to manage their workers. They devise elaborate ways for teams to collaborate and communicate, dream up long- and short-term goals to set checkpoints and monitor when and how they are met, and focus intensely on office infrastructure.
In this all-too-common rush to expand bosses often forget to develop their leadership strategy. A more nebulous concept, leadership refers to the higher-level thinking: What are our overall goals? How would my ideal representative present himself? And how can I make it second nature for my employees to embody that model? Read the rest of this entry »
7. February 2015
Source: The Economist: Schumpeter
Subject: The last 90 days
BUSINESS leaders are obsessed with how to begin new assignments. One of the bestselling business books of all time is “The First 90 Days”, by Michael Watkins, which provides a template for newly appointed managers to start with a bang. When Mitt Romney, a private-equity tycoon, ran for the American presidency in 2012 he had a 200-day action plan for turning round the free world, replete with floor plans and flow diagrams. Far less thought has gone into how bosses should leave successfully.
Lord Browne, who ran BP for 12 years, wrote in his memoirs that, as he pondered retirement from the oil giant: “My emotional self prevailed over reason. I did not know how to leave.” Niccolo Machiavelli bungled his exit from the government of 16th-century Florence. “I am rotting away,” he said after being fired. He went on to write a masterpiece on manipulation. But “The Prince” mainly dwells on how to acquire and retain power, not how to relinquish it. To fill the void, Schumpeter has drafted six rules to govern bosses’ departures.
First, the wise executive is neither tardy nor rushed. Sometimes he has no choice in the matter. Hopeless bosses may be forced out fast. Great leaders may be ambushed by fate. Lord Browne left after a newspaper delved into his private life. Akio Morita, the co-founder of Sony, suffered a stroke and Emilio Botín, the patriarch of Santander, a bank, a heart attack. But for those with the luxury of choosing when to go, timing is everything. Read the rest of this entry »