Fast boat from China

Appearing in In The Black magazine, September 2019

 

Chinese giants like Haier, Tencent, Baidu and Alibaba are now counted as global players, welding technological innovation to marketing know-how and entrepreneurial drive. But the size and rapid growth of these pioneers can obscure the emergence of thousands of smaller companies developing in China’s commercial hothouse. They are supported by a dynamic venture capital sector and an expanding domestic market. New research shows that all of them look, or will soon look, to overseas markets, and many of them are successfully competing against multinational firms operating in China.

“This new generation is looking beyond boundaries and cultivating a disruptive mindset,” says Professor Mark Greeven, one of the authors of a comprehensive study* into Chinese business innovators. “If one Alibaba can shock international stock markets and disrupt traditional industries we can only imagine what tens of thousands of under-the-radar tech-based entrepreneurs will do.”

To see the ground-level picture Professor Greeven and his colleagues interviewed hundreds of executives, entrepreneurs, and investors in China, and studied more than 200 companies. Beyond the established giants they identified three sets of Chinese innovators: hidden champions, tech underdogs, and change makers. Each represents a different set of challenges for competitors.China book

Hidden Champions

Usually, ‘hidden champions’ are midsize innovators in niche markets. Professor Greeven classifies them as having annual revenue of less than US$5 billion – very significant to Australian companies but not that much in Chinese terms. Their strategy is based on long-term growth driven by R&D investments to expand within their niche or into closely related areas.

The research identified more than 200 hidden champions in sectors ranging from machinery and chemicals to materials and electronics.

A company that illustrates this group is Hikvision, which was launched in 2002 with an innovative video compressor card for computers based on MPEG-4 technology; it has followed up with a stream of products in the field, often releasing several new products or upgrades in a year. Nearly half of the company’s employees work in R&D and about eight per cent of revenues are invested in the area.

The company began a global expansion program several years ago and is already a leading player in this field of technology. It has developed partnerships with Western companies, to the point that half of its revenues now come from outside China.

“A surprising feature is how quickly hidden champions can grow,” Professor Greeven says. “Many became domestic and global market leaders in about a decade. It is dangerous for multinational companies to underestimate the speed and flexibility with which these new competitors can emerge, make decisions and expand.”

Change Makers

While hidden champions seek to dominate an industry niche ‘change makers’ aim for the mass market, seeking benefits from digital disruption and often taking advantage of China’s high level of mobile Internet use.

These companies are able to find start-up funding from China’s large venture capital market. Toutiao, a media platform which uses AI to provide customised news through mobile phones, was supported by more than US$3 billion in venture capital after it was founded in 2012. In July 2018, the company had more than 120 million daily active users and was valued at more than US$11 billion.

There is certainly no shortage of young people wanting to start a digital-based business in China, whether in media and information, ride-hailing, finance or retail. Professor Greeven notes that the online food-ordering service Ele.me was founded in 2008 by two students from Shanghai Jiaotong University who, the story goes, got hungry while playing video games one night. By 2015, the company’s revenue had passed US$1 billion.Greeven #1

An outstanding feature of this group is that it shapes digital technology to fit consumer demand, not the other way around. Their success, especially among younger demographics, has meant that all business-to-consumer companies operating in China are now expected to have on-demand and mobile capacities.

“These companies can come out of nowhere, continually engaging with users through social media to adapt products and, as necessary, revamp their business models,” explains Professor Greeven. “Unlike corporations with legacy products and business models to maintain, change makers are entirely user-centered. Rather than pushing an existing product line they are willing to venture beyond the industry’s boundaries if they see opportunities there.”

Tech Underdogs

The third category, ‘tech underdogs’, are small and midsize enterprises, usually science- or technology-based, with revenue of less than US$60 million. Professor Greeven and his colleagues identified tens of thousands of these companies across a wide range of emerging-tech fields. The research identified more than 150 companies with significant intellectual property in photovoltaic technology, for example, and 80 health care ventures utilising various forms of AI.

“Many of these companies were founded by people returning to China from overseas, having studied at elite universities in the US or Europe,” notes Professor Greeven. “Unlike innovators in Silicon Valley, Chinese entrepreneurs work collectively to innovate and push technology and market boundaries. Although many of the ventures do not survive, some become viable competitors and even market leaders. The large number of players in any given category in China increases the chances that at least one will be able to break through.”

There have been a number of cases of Chinese companies in this category partnering with Western firms as a growth strategy. One example is Weihua Solar collaborating with German chemical company Merck, with Merck agreeing to supply advanced materials and patented information to supplement Weihua Solar’s internal R&D efforts. This partnership eventually led to the development of a solar cell that is light, flexible, and more efficient than any of its competitors.

But tech underdogs have also proved to be entirely capable of developing advanced technology on their own. The companies are targeting increasingly sophisticated fields, including genetics, cloud technology, next-gen AI, and advanced materials. Royole, a Shenzhen-based start-up, is an innovator in superthin screens and flexible displays, and has introduced the world’s first bendable smartphone, which can be folded like a wallet.

According to Professor Greeven, for non-Chinese competitors the sheer number of ventures in this category is a problem, especially as even successful ones have little media presence.

“It makes it difficult for multinationals to know which local companies represent a threat and which do not,” he says. “Compared with their Chinese counterparts, multinationals based outside China tend to have fewer connections with local companies and investors. As a result, they are not part of the conversation about emerging threats. For the tech underdogs, that lack of visibility can be an advantage that enables them to catch established competitors off-guard when entering new markets.”

Challenges ahead

While Chinese firms in each category have shown remarkable capacity for innovation, the research suggests that structural weaknesses persist.

For the ‘hidden champions’, the danger is that they will themselves be subject to technological disruption. As they become more successful their public profile will grow, which will bring more competition. They are particularly aware of the possibility of new markets entrants from India and south-east Asia, leveraging their own large domestic markets as a springboard for regional and global markets.

The ‘change makers’ face the problem of creating sustainable competitive advantage in a market of fast-moving trends. They are also aware that regulatory changes in China could undercut their business model, and that regulatory systems in other countries could impede expansion.

For the ‘tech underdogs’, there is the problem of commercialising niche technology. Because so much is invested on a single product, failure to launch means there are few, if any, alternatives.

Ways to compete

Based on their research, Professor Greeven and his colleagues have a series of recommendations for companies wanting to compete in China or are concerned about Chinese competition at home.

  1. Expect the unexpected. A Western company might be aware of the main Chinese competitors but there are likely to be others who are keeping a low profile or have not yet made the decision to go global. A good move is to improve knowledge of industry developments within China to include threats that are not immediately obvious, and to assess their strengths and weakness.
  2. Look for collaborative opportunities. Many Western companies have built good partnership relationships with Chinese firms, usually through subsidiaries. Those companies that have been willing to give Chinese subsidiaries more local autonomy than they might offer those in other countries have generally been more successful. Partnership with or investment in a Chinese firm can also help to identify emerging threats and opportunities.
  3. Realise the threat. Companies that have been in a market leadership position for a long time can easily become complacent. They need to continually strengthen their home base, ensure investment in innovation, and focus on their core strengths.

 

“The best advice for Western companies is to understand the challenges China’s innovators pose and consciously develop counter-measures,” says Professor Greeven. “Compete on their strengths, study the way China’s competitors do business, and rethink assumptions about how to innovate successfully.”

 

* Pioneers, Hidden Champions, Change Makers, and Underdogs: Lessons From China’s Innovators (MIT Press, 2019) by Mark Greeven, George Yip and Wei Wei.

Mark Greeven is professor of innovation and strategy at IMD, a business school in Lausanne, Switzerland and Singapore. George Yip is emeritus professor of marketing and strategy at Imperial College Business School in London. Wei Wei is CEO of GSL Innovation, a consulting firm in Shanghai.

 

 

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Communication, detecting fraud, and how the big boys play

Appearing in In The Black magazine, September 2019

 

Lead the Room
B
y Shane Michael Hatton
Major Street Publishing, $29.95

Lead the RoomGood leadership is built on effective communication, says consultant and presentation specialist Hatton. This does not simply mean standing up in a forum, although public speaking is an essential skill that can be used as a framework for communication at all levels, including with peers, superiors and teams. At the heart of communication is the confidence and credibility that comes with knowing yourself and your narrative: Hatton calls this ‘positioning’, or how other people place you in their mind.

Connected to this is the value you can offer to others. This is the section of the book where the public speaking framework is developed, and Hatton examines a range of techniques to communicate with a clear message and a memorable edge.

Outstanding communication involves a constant process of self-improvement, review and feedback. It should be an holistic endeavour, says Hatton. Don’t think of a speech or a conversation as an end but as a platform for further thinking.

Hatton unpacks his points with straightforward practicality. He also offers personal anecdotes which are illustrative rather than indulgent. The book might not be (and does not pretend to be) the final word on leadership and communication but it is a good place to start.

 

Detecting Accounting Fraud Before It’s Too Late
By Oriol Amat
Wiley, $79

It is unfortunate that a book like this is needed but the reality is that accounting fraud happens far too often. Amat, a Spanish academic specialising in the field, has pulled together a huge number of cases where large-scale fraud has occurred and uses the evidence to provide warning signs for auditors, investors and managers.

The most common frauds relate to the mis-pricing of assets and debts, incorrect estimation of income, and deficiencies of risk information. Often, they are hidden by unexplained complexity, changes in accounting criteria, or odd transactions within a corporate group. Figures that are radically different to industry norms signal problems. Amat suggests several ratios that are good indicators that something is amiss.Accounting Fraud

The people associated with fraud usually lead lifestyles out of proportion to their legal income although, interestingly, they are often reluctant to go on holiday. Senior officers who are engaged in fraud will aggressively reject any scrutiny because, they say, they are making money for the company and its shareholders.

In fact, many company leaders who are secretly cooking the books are hailed as corporate heroes – right up to the moment when it all comes crashing down. So if something looks too good to be true, it probably is.

 

Goliath’s Revenge: How Established Companies Turn the Tables on Digital Disruptors
By Todd Hewlin and Scott Snyder
Wiley, $46 

Old dogs can, it seems, not only learn new tricks but can learn them very well. Hewlin and Snyder, who between them have worked in start-ups, established companies, consulting and research, look at the experience of giants like Cisco, General Motors, and Mastercard to discover how they beat off challenges from tech-based disruptors. Not only did they survive, they emerged stronger than ever and reclaimed market share lost to smaller competitors.

Big companies have crucial assets, such as deep pools of talent and access to innovation networks. Capital reserves and solid customer relationships mean they can leverage new technology, so long as the leaders are willing to re-think the business model. Technologies like AI, robotics, and blockchain can often be incorporated by large corporates but they must be willing to move fast and accept the reality of disruption. Beating disruptors can also entail watching them carefully and adopting some of their techniques.

Hewlin and Snyder distil this into a set of rules for cultural and operational changes, and they include templates and checklists to identify problems and monitor progress. They underline the importance of getting the right people on board, finding suitable metrics, and pursuing new growth options. Not easy, but it can be done.
Goliaths Revenge

 

Good enough, good thinking and good design

Appearing in In The Black magazine, August 2019

 

Ish: The Problem with Our Pursuit for Perfection and the Life-Changing Practice of Good Enough
By Lynne Cazaly
Woodslane, $25, 252 pages

ishAt first glance this book appears to be merely enjoyably eccentric but a deeper look shows that it has some interesting, important points to make. Cazaly, a business adviser and facilitator, believes that a key problem with the modern world is the search for perfection, and it is making us both stressed and unproductive. In most cases that we encounter, she says, it is fine to be good enough – good-ish, in a word.

She is not saying that we should do everything (or anything) in a slapdash, half-hearted way. Instead, we should invest some time working out what our real priorities are, and which things need to be done perfectly. In fact, if we constantly search for perfection, whether in choosing what shoes to buy or writing a memo, we will probably accomplish very little. In business, it can make more sense to put the Minimum Viable Product version into the marketplace and improve it in later iterations than wait until every bug is fixed. Learn, evolve, and accept that every creative process has its shortcomings.

So do less but choose the right things to do, and how to do them. It might not be a perfect message but it is, well, quite good enough.

 

How Could This Happen? Managing Errors in Organizations
Edited by Jan Hagen
Palgrave Macmillan, $95, 292 pages

Hagen, a Berlin-based academic who specialises in error analysis, has brought together a wide-ranging collection of essays looking at how mistakes occur in organisations and, perhaps more importantly, what can be done to prevent a recurrence. The first part provides a series of theoretical examinations, looking at how rigid business culture can prevent the proper reporting of problems – the Fukushima reactor disaster is an example. Some analysts look at the requirements of effective reporting systems, including people at the operational level knowing they can report concerns without fear of retribution. Strict hierarchy systems, with the person at the top assumed to be infallible, also need to be broken down.How Could This Happen

Several essays look at the Crew Resource Management system now used in the aviation industry, which has dramatically reduced the incidence of errors. Other essays examine changes in medical diagnoses, where a team-based approach has proven effective. The best place to start developing an error reporting system is with early training, as an interesting piece on the Israeli Air Force shows. There also needs to be a mechanism for clear-minded analysis of the causes of the error in the first place.

We all make mistakes, says Hagen. The real issue is what we learn from them.

 

Exceptional Leadership by Design: How Design in Great Organizations Produces Great Leadership
By Rob Elkington, Madeleine van der Steege, Judith Glick-Smith and Jennifer Moss Breen
Emerald Publishing, $57, 311 pages

This collection of essays covers a great deal of ground but the common theme is that outstanding leadership is the result of a deliberate process of thinking about how to do the job. The place to start is defining the problem to be solved, and then marshalling the necessary personal and organisation resources. A leader has to be willing to honestly evaluate their strengths and weaknesses, and must be humble enough to ask for help when it is needed. Several essays make the point, drawing on examples and anecdotes, that great leadership is not about individual charisma but about collaboration, the building of relationships, and ongoing learning. This last point is critical: an exceptional leader has to design their job to include self-reflection and feedback.

An important contribution argues that a good way to find solutions is through prototyping. Small-scale test runs, gaming, and extended thought exercises can be useful tools, as long as there is honest follow-up and analysis. Prototyping can even show that you are asking the wrong question, and re-framing is called for. Again, the leader has to accept that they might not have all the answers. And acceptance of that might, in the end, be the most crucial lesson of all.

Exceptional Leadership by Design

10 great TED Talks on careers

Appearing on In The Black Digital site, June 2019

Kavi Guppta presenting his TED talk, The Remote Work Revolution.

Kavi Guppta presenting his TED talk, The Remote Work Revolution.

 

Yes, you can find work that is fulfilling and inspiring, but rethinking your approach is sometimes the best way to get there. The speakers in these 10 inspiring TED Talks share their thoughts on how to have a great career.

1. Scott Dinsmore: How to Find Work You Love

In an era when so many people dislike their jobs, Dinsmore argues that it is possible to find work that will inspire you, if you can determine your true values and goals. He offers a framework for personal discovery through incremental steps and considered risks, pointing to the need to make connections with other people who share your passions, priorities and interests. He says the fundamental question you have to ask yourself is, “What work can you not do?”

2. Marie Claire Lim Moore: Why Asia Needs More Tiger Women – TEDxWanChai

Why are there so few Asian women in senior management positions in most Asian countries when so many do well in university? Marie Claire Lim Moore believes that the key reason is the belief that women’s primary role should be that of mother and wife, coupled with the reluctance of many companies to hire women after a career break.

She looks at the Philippines, which has a high proportion of women in senior roles, as an example of how to change expectations and attitudes.

3. Nigel Marsh: How to Make Work-life Balance Work

The author of Fat, Forty and Fired examines the concept of work-life balance, emphasising that success should be about how you live your life. A good life requires intellectual, emotional and spiritual fulfilment, all of which are unlikely to be achieved by “working long hours to earn money to buy things you don’t need to impress people you don’t like”.

Each person must find balance for themselves and be aware of “the little things” that can, together, make for a full and happy life.

4. Larry Smith: Why You Will Fail to Have a Great Career

Economist Smith examines the many excuses that people offer for not pursuing the passions that will lead to great careers, such as the excuse that great careers are only for eccentric, lucky or highly gifted people.

Smith dissects and dismisses the range of excuses, arguing that any individual can create and develop a great career. It requires courage, self-awareness, hard work and single-minded commitment, but great careers are the means to make the world a better place.

5. Kavi Guppta: The Remote Work Revolution – TEDxUWA

Guppta believes that technology has made remote work viable as a career option in many areas of activity. He advises that people trying to find work on this basis should emphasise their ability to organise themselves, work autonomously, and communicate across cultures.

Companies that want to use remote workers should start small and build up a network over time. While remote working is not for everyone, the number of people who want to take up the option is very likely to increase.

6. Carol Fishman Cohen: How to Get Back to Work After a Career Break

Returning to work after an extended break can be a challenge. Cohen offers a wealth of suggestions for “relaunchers”, from networking to find a job to updating working skills, especially in relation to technology.

She also looks at the intern-like options that some companies are offering to people returning to the workforce. A “testing-out period” can minimise the perceived risk that some employers attach to a returning worker. There can be substantial long-term benefits for both the worker and the company.

7. Jason Shen: When Looking for a Job Highlight Your Ability Not Your Experience

Shen notes that very few people hold jobs that line up directly with their experiences or their academic studies. But he believes that this is not necessarily a problem, if a job applicant can demonstrate relevant and high-level abilities, such as a special mode of problem-solving.

Equally, employers have to be willing to look past traditional metrics to identify people who are a good fit with the company and can bring innovative ways of working and thinking.

8. Susan Colantuono: The Career Advice You Probably Didn’t Get

Many women who want to move into senior corporate positions find themselves stuck in middle management, despite excellent peer reviews and relevant training. Colantuono believes that the missing piece is connecting professional strengths to the company’s strategic goals.

Most career advice that women receive, she says, focuses on personal development. Closing the gender gap at the top will require training and mentoring that make the need for alignment explicit, so that talented people can compete on a level playing field.

9. Susan Redden Makatoa: Flexible Working Should Be the Norm for Everyone – TEDxMacquarieUniversity

In her examination of flexible working, Makatoa notes that Australian legislation theoretically provides the right to flexible work to everyone but in practice it is mainly utilised by working mothers with young families.

This imbalance has created a feeling that this group has special privileges, leading to resentment from others. What is needed, says Makatoa, is a change of mindset so that flexible work rights are utilised by all. Some companies that have done this already have seen productivity enhancements and improvements in employee satisfaction.

10. Angela Lee Duckworth: Grit, The Power of Passion and Perseverance

Duckworth has conducted extensive research on why some people succeed where others fail and concludes that grit – the view that life should be approached as a challenging marathon rather than a sprint – is the determining factor.

Innately talented people often do not follow through on initiatives and fail to reach their objectives. People with grit are more likely to accept occasional failure as the price of learning, a process which often translates into long-term, sustainable career success.

Bonus:

Steve Jobs: How to Live Before You Die

Though not officially a Ted Talk, Steve Jobs’ commencement speech to Stanford University students examines how to see opportunities in setbacks, how to connect apparently disparate events of life, and how to find a career that can be a personal passion.

His concluding message is, “Stay hungry, stay foolish”.

Brains and boards

Appearing in In The Black magazine, June 2019

 

Master Your Mind: Counterintuitive Strategies to Refocus and Re-energize Your Runaway Brain

By Roger Seip and Robb Zbierski

Wiley, $39, 256 pages

Master Your MindA recurring image in this book is that little wheel that pet hamsters run on: faster and faster but never going anywhere. Too often, say workplace trainers Seip and Zbierski, people confuse busyness with productivity, and long hours with focus. Master Your Mind underlines the value of slowing down, taking time to reflect, and saying no when it is appropriate to do so.

It sounds easy but for many people working fast and hard has become a habit. Even when they see themselves getting stressed and making mistakes they continue, often in the belief that it is the way to compete with everyone else. Seip and Zbierski cite a solid body of research showing that stress leads to poor decisions, although they are careful to not get carried away with neuroscientific jargon. They provide some tests to establish whether there is a need to slow down and they offer advice on how to do it. Regular conversations with oneself to develop mindfulness and set priorities are also useful.

If the idea of doing less in order to do more seems counter-intuitive it makes sense when it comes to quality and sustainability. Going nowhere fast is not a good career path. Ask the hamster.

 

Best of Boards: Sound Governance and Leadership for Nonprofit Organizations (2nd edition)

By Marci Thomas and Kim Strom-Gottfried

Wiley, $50, 256 pages

Being a board member of a not-for-profit organisation is a difficult proposition: tough decisions, considerable legal responsibilities and (usually) no remuneration beyond the feeling of doing something important and worthwhile. This book aims to help people new to NFP boards, whether they have experience with for-profit companies or are coming fresh to the field.

Thomas and Strom-Gottfried cover a great deal of ground, from understanding NFP financial statements to pushing through a change program. There is a framework for effective oversight, with one of the most useful tools being a template for resolving disagreements between the board and senior management.Best of Boards v2

The authors illustrate their points with interesting anecdotes and examine the legal and ethical questions that arise in connection with NFPs. They also emphasise that for a board the great enemy is complacency. The time when you are congratulating yourself for having solved all the problems is the point where you should start to look at the next wave of issues.

A problem with the book is that it is designed for NFPs operating within the US system of regulation, reporting and compliance. But this is a small point, and there are many valuable lessons here on effective governance and sound strategic thinking.

 

Thriving in the Gig Economy: How to Capitalize and Compete in the New World of Work

By Marion McGovern

Career Press, $30, 224 pages

McGovern was working to bring freelancers and employers together before the term ‘gig’ was coined to describe a new way of working, so she is well-placed to talk about the advantages and pitfalls. She looks at the equation from both sides, and some of the most important chapters deal with how companies can effectively utilise specialised, short-term contractors.

As for freelancers, she notes that the most successful ones see themselves as a brand to be framed, strengthened, and leveraged. They must be willing to market themselves, constantly upgrade their skills, and stay abreast of technological developments. Having a system for handling the practical business of getting paid is also essential.

McGovern identifies people who are returning to the workforce after an extended break or after retirement as a growth trend for the gig economy. It might be as an Uber driver or as an interim CEO but it is important to have the right mindset and to know where you can add value.

This is a useful, interesting book. It is hard to argue with McGovern when she says that the development of the gig economy is going to continue. She offers good advice on how to ride the wave.

Gig economy

 

Downloadable research

 

Resilience

Professor Jill Klein, who directs the Resilient Leadership program at Melbourne Business School, believes that setbacks can provide crucial lessons if approached with the right mindset. Whether the setback relates to failing to receive a promotion or dealing with an organisational restructure, she advises a focus on three questions: why did it happen, what does it mean, and what can I do?

This approach helps to clarify what is in your control and what is not, as well as identifying weaknesses that might be remedied. It also puts you in a positive frame of mind, so you can focus on the future rather than the past.

To read the essay and related material go to:

https://1.mbs.edu/news/A-resilience-expert-explains-how-to-pick-yourself-up-after-a-setback-at-work

 

Trends

AccentureA major study from Accenture, Are Your Ready For What’s Next?, aims to identify the critical technology-related issues that will drive the next three years. The key trends are:

–         DARQ – distributed ledger technology, artificial intelligence, extended reality, and quantum computing – as the next source of differentiation and competitiveness

–         a new level of interactiveness that will create a “tech identity” for every consumer

–         technology-driven work capabilities alongside employees’ existing skills, requiring new methods of work

–         enhanced avenues of “ecosystem collaboration” that open new opportunities but also raise security threats

–         empowered consumers that expect customised and on-demand experiences.

Download the full study or a ‘short read’ version from:

https://www.accenture.com/gb-en/insights/technology/technology-trends-2019

 

CFOs

Chief Financial Officers who speak in the same style as a company CEO and seldom offer differing viewpoints are likely to earn more and move up faster, according to a study by the Jones Graduate School of Business of Rice University and the University of Miami Business School. The research examined CFOs in 2,384 US companies, looking at “language style matching”, an unconscious form of imitation based on the use of terms like “I”, “we” and “us”.

But the study authors noted that even though imitative CFOs did personally better than others, in the M&A area their companies did less well than the average.

For the complete study go to:

https://phys.org/news/2019-02-ceo-cfos-higher.html

 

Hiring

In a useful TED Talk, Priyanka Jain examines the new hiring landscape. As the head of a consulting firm that uses neuroscience, algorithms and AI tools to make hiring decisions more effective, she draws on her experience to provide advice on how job seekers should structure applications. She suggests a move away from the traditional dot-point resume in favour of a focus on distinctive abilities and personal qualities.

Jain also explains how a new generation of psychometric testing tools are being used to measure creativity and suitability, resulting in better fit and a win-win situation for the company and its employees.

To watch, go to:

https://www.ted.com/talks/priyanka_jain_how_to_make_applying_for_jobs_less_painful

 

Keeping it real

Even the best-laid plans often fail to survive their first encounter with reality, and Charles Vandepeer, a former intelligence officer in the Royal Australian Air Force, is interested in why. In an insightful essay, Self-Deception and the ‘Conspiracy of Optimism’, he looks at military operations that have failed due to over-assessment of one’s own abilities and under-estimation of the opposition.

Business disasters often stem from the same pattern of group-think. A leader who wants to combat this has to actively encourage dissenting views, even if it means going outside the usual circle of advisers. Confidence is necessary but arrogance is a sure path to failure.

To read the essay Self-Deception and the ‘Conspiracy of Optimism’ go to:

https://warontherocks.com/2019/01/self-deception-and-the-conspiracy-of-optimism/

 

Victim/Victor

The Rise of Victimhood Culture: Microaggressions, Safe Spaces, and the New Culture Wars

By Bradley Campbell and Jason Manning

Palgrave, $65, 278 pages, ISBN 9783319703282

How did it come to this? When did it become, on the campuses of many upscale US universities, almost impossible to say anything without someone taking offence and initiating legal action through an office set up for the purpose? How is it that professors can be applauded for saying that they want to see a “white genocide”? When did hate-crime hoaxes become acceptable, even desirable?

Campbell (Associate Professor of Sociology at California State University) and Manning (Associate Professor of Sociology at West Virginia University) have collected a vast body of research on the subject – at considerable professional cost, it should be said – and have come up with some answers. They track the spread of the new culture of victimhood through universities and into broader society, and believe it began about ten years ago, when a new generation entered university life.

These teenagers had been continually told by their affluent, left-wing parents that they were “special snowflakes”: unique, beautiful and fragile. Years of helicopter-style parenting had given them the impression that they had the right to never be offended or challenged, and that their country was characterised by an evil history and a fearful present. To be subjected to an idea that you didn’t like was an insult, and that made you a victim. If you were, or saw yourself, as a member of a minority, then your victim status automatically became much higher.

And thus the idea of the micro-aggression was born. The key to it was that the content of any comment from someone outside one’s own circle was less important than the interpretation placed on it, and the interpretation was usually that the comment was racist, sexist, homophobic, or otherwise offensive. Campbell and Manning note that even the phrase “on the other hand” was condemned (‘ableist’, apparently).

University administrations responded by setting up administrative bodies to hear complaints and pronounce sentences. These tribunals quickly extended their reach, equating what might have been a minor slight or a simple misunderstanding with actual violence. Hard evidence was not required: Campbell and Manning cite several cases where tribunals found a student ‘guilty’ of rape on campus even though police had established the accusations to be untrue.

From a sociological perspective, the culture of victimhood might be compared with the earlier culture of dignity, which was marked by self-restraint, forbearance, and quiet courage – and, when it came to issues such as racial equality, a sense of reciprocity and fairness. But all that was seen as hopelessly, dangerously outdated. The new mentality was about a war between the enlightened few – the ‘woke’ – and the rest. No quarter, no respite. Haters got to hate.

The key enemy of the victimhood movement was, inevitably, the older white male, always depicted as privileged, racist, misogynist and stupid. An army of media commentators agreed. But Campbell and Manning provide a poignant, anonymous quote from one of the snowflakes’ targets:
I am very lower middle class. I’ve never owned a new car, and I do my own home repairs as much as I can to save money. I cut my own grass, wash my own dishes, buy my clothes from Walmart. But oh, brother, to hear the media tell it, I am just drowning in unearned power and privilege, and America will be a much brighter, more loving, more peaceful nation when I finally just keel over and die.

And this is why over 62 million people voted for Donald Trump. Cause, meet effect.

One of the most telling chapters of the book deals with the rise of hate crime hoaxes. In the immediate aftermath of Trump’s election there was a dramatic rise in the number of people saying they had been attacked by Trump supporters. However, many of the claims turned out to be simply fabricated. Campbell and Manning examine about a dozen cases, and a journalist called Andy Ngo has compiled a list running into the hundreds.

Presumably, being the target of an attack gives a person in the victimhood culture more status, and fits into a larger anti-Trump narrative. The problem with this is that there simply aren’t enough white racists to go around – if there were, there would be no need to invent them. (In fact, the statistics suggest that the number of real hate crimes is falling. The only growth area is attacks on Jews by members of the ultra-militant Nation Of Islam – something which is largely ignored, as it does not fit into the paradigm of black people as helpless victims of white racism.)

It says much that the celebrity of Jussie Smollett, the mid-level actor who recently staged an attack on himself by Trump supporters, has grown since his claims were revealed to be falsehoods. In victimhood culture, a hate-crime hoax is not a dishonest trick but a sign of true commitment to the cause. Well, fakers got to fake.

Campbell and Manning are not optimistic about the situation getting any better, although they discuss the possibility of victimhood culture burning out – there are already signs of it consuming itself in a “purity spiral”. On the other hand, they see the more likely outcome being that it will continue to grow and mutate, causing an even greater backlash. The result will be a more polarised, antagonistic society.

It takes no great effort to see the patterns described in this book in Australian society, as victimhood culture spreads from universities into the media. At present, Australia seems to be running a few years behind the US trend, but this book is a signpost of what might be coming. Don’t say you weren’t warned.

Rise of Victimhood Culture

Fast growth, CFOs, and a graceful exit

Appearing in In The Black, May 2019

 

Blitzscaling: the Lightning-fast Path to Building Massively Valuable Companies

By Reid Hoffman and Chris Yeh

HarperCollins, $35, 288 pages

BlitzscalingHoffman is the co-founder of LinkedIn as well as the former COO of PayPal, and Yeh has written extensively about start-ups, so between them they bring a great deal of experience to bear on the issue of rapid growth. They see four essential components for exponential transformation: building networks that allow for easy entry of new customers; finding a niche which will allow for an eventual transition into the  mainstream marketplace; picking distribution channels which have an in-built capacity for scaling; and looking for high gross margins to provide funds for re-investment.

Hoffman and Yeh do not pretend that speedy growth is easy, and they provide plenty of examples of failure. They also note that many of the companies that achieved massive size changed their strategy several times, as the marketplace and the company evolved. At the same time, speed is crucial, even if it means sacrificing efficiency. Be willing to experiment, they say, and be equally willing to admit it when you make a mistake and a new course if needed.

All this is presented in a clear, balanced way, thankfully free of tech-hype. Whether you have big plans or are interested in how giants grew, there is fascinating material here.

 

The Traits of Today’s CFO: a Handbook for Excelling in an Evolving Role (2nd edition)

By AICPA and Ron Rael

Wiley, $79, 160 pages

The CFO job has always been a challenging one, straddling strategic management and financial functions. Rael, a leadership consultant who has studied the role from many different angles, believes that in the future it is only going to get harder, with the CFO needing to add technological expertise and coaching acumen to the toolkit. This book lays out how the various new skills can be integrated with the traditional demands, explaining how the role is changing. Rael covers a great deal of ground, punctuating the book with self-diagnostic tests as well as good illustrative examples. He believes there are ten critical skills for the CFO and the book systematically unpacks each one. Most chapters include a ‘best practice’ section which links theory with everyday problem-solving.9781119548232 cover.pdf

If anything, the CFO role is becoming less about finance (although a high level of number-crunching ability is still mandatory) and more about collaboration, communication and soft-skills leadership. One telling suggestion: the CFO should spend at least a quarter of their time out of the office, talking with investors, suppliers, peers and people in non-financial roles.

It adds up to a useful package, as well as an insightful commentary on the evolution of financial management.

 

Business Exit Strategies: Family-owned and Other Businesses

By Frederick Lipman

World Scientific, $90, 164 pages

Knowing how to make a graceful departure is difficult in any circumstances, and particularly tough when a business is involved. Lipman, an adviser and author, has provided an interesting guide to make the process easier, covering circumstances ranging from a small enterprise to a large corporation.

There are many pitfalls – in fact, Lipman devotes the first two chapters to common mistakes – but most can be overcome with careful planning and an eye to market conditions. If the business is being sold then there must be comprehensive, audited financial accounts available, and any outstanding legal disputes should be settled. If the business is to be passed on to family members then the procedures should be clear, and the role of the founder, if any, codified and agreed.

Lipman devotes a long section to the tricky issue of valuation, noting that the right time to sell a business is when it is on a growth path, not when decline has set in. Another exit option is to take the business public, which can work well but is a much larger project than a direct sale.

The book also looks at letters of sale and non-disclosure agreements. Useful advice, when it comes time to leave the stage.

Business Exit Strategies

 

Downloadable research

 

Value add

Even those companies that have already embraced business analytics often have difficulty understanding how they are adding value to the company’s activities. In a collaborative project, the Melbourne Business School and A.T.Kearney have published the ‘Analytics Impact Index: Understanding the value of analytics and how you can improve performance’ to provide benchmarking and guidance. Building on comprehensive survey data, it includes the Value Index, a tool for assessing the contribution of analytics to total profit; and the Maturity Index, which offers a framework for the comprehensive assessment of a company’s analytics practices and processes to help achieve value.

Download from:

https://analyticsimpactindex.mbs.edu/

 

Disruption

‘Navigating a World of Disruption’ is a briefing note prepared by McKinsey for the 2019 World Economic Forum in Davos, focusing on both the value-creating opportunities and the intense competitive challenges of the digital era. It provides data showing that those organisations that have been quick to utilise AI and analytics technology are doing well, while the performance gap between these organisations and others is growing quickly.

At the global level, China and India continue to dominate growth figures but a number of new players, mainly in the Central Asian and South-east Asian regions, are poised for breakthrough levels of growth.

Download from:

https://www.mckinsey.com/Featured-Insights/Innovation-and-Growth/Navigating-a-world-of-disruption

 

Banking on it

Singapore-based research firm J.D. Power has released a summary of its Australia Retail Banking Satisfaction Study, providing a ranking of financial institutions and pointing towards areas which need to improve. It revealed that 42 per cent of Australian customers of major banks, and 24 per cent of customers with other financial institutions, do not trust their bank.

The study was based on responses from 4,730 customers. Westpac ranked highest among the major banks, performing well in the account information and account activities factors. In the non-major banks category, ING performed best.

The study also identified strong growth in mobile app usage for personal banking.

Download the summary at:

https://www.jdpower.com/business/press-releases/2018-australia-retail-banking-satisfaction-study

 

Visual aids

The Reserve Bank provides a wealth of information, and material from its monthly pack of charts is particularly useful for inclusion in reports and presentations, as well as for general at-a-glance background. The charts include information on the global economy, growth in Australia, housing credit growth and credit growth by sector, interest rates, trends in the business sector, consumer sentiment, the outlook for inflation, and key banking indicators.

The pack is updated monthly and is released on the first business day of each month. Supplementary information can be obtained from other parts of the RBA site.

Download from:

https://www.rba.gov.au/chart-pack/

 

Looking ahead

In a thought-provoking TED Talk Gunjan Bhardwaj, described here as a “complexity specialist”, examines how artificial intelligence and blockchain have been used in the German health system to gather and analyse unprecedented amounts of data. The information ranges from drug test results to patent applications to patient treatment records, with AI being used to integrate disparate information into useful material. Blockchain technology has been utilised to capture the results of lab tests and in-progress research while allowing for the protection of intellectual property. Even for those not in the health sector, the address underlines the variety of applications that these technologies are finding.
Watch at:

https://www.ted.com/talks/gunjan_bhardwaj_how_blockchain_and_ai_can_help_us_decipher_medicine_s_big_data/