Stay abreast of what’s happening internationally with developments in corporate public affairs. Here is news that you may find useful and interesting:
Nokia’s Next Chapter ND
McKinsey Quarterly, December 2016
The only way a company survives according to Lou Gerstner, former IBM CEO, is by changing 4.5 or even 25 times over 100 years. Nokia embodies this survival spirit starting as a lumber mill in Southern Finland and transforming into one of the major producers of mobile phones in the 20th and early 21st century. Described as a ‘phoenix’ rising from the flames of the iPhone and cheaper handsets, Nokia’s survival is attributed to new CEO Risto Siilasmaa commitment to developing trust among the board and treating all employees with fairness and transparency. Nokia now aims to expand within China through licensing its name to established HMD for 10 years.
The full interview with CEO Risto Siilasmaa is available at www.mckinsey.com
Why the French email law won’t restore work-life balance ND
Michael Mankins, Harvard Business Review, January 2017
The right to disconnect law was enacted on January the 1st in France, the law prevents companies (with more than 50 employees) from contacting staff after hours. When the average senior executive receives 200 or more emails per day and the average supervisor devotes 8 hours every week to email communication, a full business day. HBR estimate that 25% of the time is used to respond to emails they shouldn’t have to. Mankins argues that while the law is commendable, it fails to take into account that preventing emails at the weekend will simply force employees to work during the weekend due to the requirement to devote additional time to emails at work. The clear solution to this is to eliminate the 25% of emails which are irrelevant and prevent it from becoming a more disruptive issue through the removal of the ‘reply all’ function. Ultimately greater amounts of knowledge and leadership are required to enhance worker productivity and free time. For more information see: www.hbr.com
What so many strategists get wrong about digital disruption. ND
Frank Vermeulen, Harvard Business Review, January 2017
Vermeulen outlines the four top disruptors to industries through the insertion of the ‘digital world’. Firstly the issue with the concept that winner takes all, and that significant market presence equates to success. Seen through apps like Uber which have focused on having a strong presence, yet consistently have suffered losses as App loyalty doesn’t exist. Just because a taxi driver drives for Uber, doesn’t mean he doesn’t drive for Lyft. Markets are now vast and able to sustain multiple players. The second misconception is that the digital disruption will render old technology obsolete. New technology will act as a complement to existing technologies with strategy needing to be based around the idea that new developments will not rapidly, drastically change the way tasks are undertaken.
The third wrong assumption is that enhanced digitisation will act to remove geographic distances, which it arguably has not done to as great an extent as expected. Human interaction, particularly for HR and consultancy, requires face-to-face meetings, it is unlikely technology can ever replace this. The fourth wrong move is the over-estimation of the speed in which change will occur. We are constantly told the world is rapidly changing and technology is constantly evolving, but is it, is it? The rate of change is arguably not increasing at all and organisations basing strategy on future opportunities, like INGs investment in the Second Life fad. Create a strategy based on the context you are in, don’t assume uniformity or overnight technology gold-rush opportunities.
For more information see: www.hbr.org
New French Law Bars Work Email After HoursND
David Morris, 2nd January, Fortune.
France has always placed workers rights and wellbeing as a crucial part of the economy, with trade unions being a major political actor. The recent ‘right to disconnect’ law may appear to be a major win for workers throughout the nation yet, it's passing in May was also accompanied with measures to expedite the sacking of employees with the ultimate intention being to liberalise the French economy further. The law is designed to prevent burnout which is mutually beneficial for both the employee and the employer with Stanford University estimating the cost of stress costs the healthcare system between $125 and $195 billion a year in the US with $48 billion being directly attributed to stress. The large healthcare costs are usually passed directly onto employers with the removal of an important source of stress out of office hours being an effective way to prevent raising healthcare costs.
For more information see: www.fortune.com
Deliveroo orders in lobbying helpND
David Singleton, 7th December 2016, Public Affairs News
Delivery giant Deliveroo (mopeds with the kangaroo) has fully utilised the growing ‘gig economy’ to create high levels of market presence in the UK and Australia. Currently, a case is being prepared by members of the British Parliament to investigate working conditions and pay in the growing informal economy. Deliveroo has stood out due to its decision to inform workers that they could not be recognised as staff members of the firm while a pay row is ongoing with its couriers. This court case will prove to be a crucial litmus test for both the UK and Australia who have similar sized informal economies and policies in place to protect workers. Investigations are occurring into working conditions at Asos and Sports Direct, and the treatment of couriers at Uber and Hermes. The inquiry will undoubtedly have knock-on effects that will influence a number of industries current staffing practices.
For More information see: www.publicaffairsnews.com
How to confront a dark corporate pastND
The Economist, 29th October 2016.
Confronting historical crimes, misdeeds or unethical practices is a necessary undertaking for businesses to determine how to implement overriding guiding ethics. Citing the Dutch clothing retailer C&A acknowledging its actions during the Second World War and its exploitation of Eastern European labourers. The COFRA Holding, who own C&A personally funded a history of the firm to published while fully understanding what would be uncovered. The five-year process was funded to turn the dark history into a 'platform' for advancement. Confronting an ugly past is not undertaken regularly with multiple mainstream, every day, companies refusing to appropriately acknowledge the historical events which have assisted their business position. Corporate historian Lutz Burdass assessed 100 firms that had thrived during the Second World War and determined that 30 had correctly assessed their wartime activity and the potential requirement for reparations for being 'heavily involved in Nazi crimes.'
For more information see: www.economist.com
A tale of three AsiasND
Jay Datesh, Miklos Dietz and Attila Kincses, Mckinsey, September 2015
Asia is predicted to produce 45% of all growth in banking revenues by 2020. Acknowledging the potential GDP increase in tier two countries is necessary, particularly in Chinas 150 tier-two cities which will represent a significant proportion of the 95% growth of all banking forecast to occur in urban areas. In developed Asian nations, 70% of growth will come from the retail-banking sector while personal banking for the emerging middle class will prove to be a 'bright spot'. The increasing level of accessibility to financial services for consumers in urban and rural Asia will create rapid expansion in wealth management and also make personal and corporate lending far more accessible.
For more information see: www.McKinsey.com
Why Ireland doesn't want Apple to pay back 11 billion pounds in taxes. ND
Zlata Rodionova, The Independent, 20 December 2016
Ireland is currently in the process of protesting the collection of billions in taxes which will put an end to it's 'sweetheart deal' with Apple. The European Commission has found that the Irish government were accepting a tax rate of 0.005% in 2014, breaching EU competition policy. The Irish economy is highly dependent upon multinationals with around 1,000 firms have created headquarters in Ireland to take advantage of the low corporate income tax. Losing the appeal would send a clear message to other companies in Ireland about the power in Brussels and jeopardise the foreign direct investment representing 165% of the GDP. The Commission is become a greater player in EU economics, forcing Dutch authorities to recover 30 million euros from Starbucks and a similar amount in Luxembourg from Fiat Chrysler. Further probes into corporate tax policy within further EU nations is expected.
For more information see: www.independent.co.uk
Construction industry becoming increasingly gender-segregated, report findsND
Fiona Smith, The Guardian, 12th December 2016
Currently, women make up 12 per cent of the construction sector, down from 17 per cent in 2006. The roles undertaken are also traditionally more junior with the turnover rate at 39 per cent faster rate for women. Further to this, both genders suffer due to a culture of glorifying excessive working hours and a culture of 'shaming.' individuals who don't comply. Combined with this is commonplace sexism, a lack of transparency in the recruitment and promotion processes. Ultimately a lot of power lies with the company or investor who employs the construction firm with reforms to the sector being entirely necessary for both men and women. The expected 12-16 daily hours 6 days a week is unsustainable causing unnecessary personal and social damage.
For more information see: www.guardian.com.au
How Unilever Reaches Rural Consumers in Emerging MarketsND
Vijay Mahajan, Harvard Business Review 14th December 2016
The rural consumer is an emerging demographic with a technology-enhanced middle-class rapidly expanding. Globally there are 3.4 billion potential rural consumer customers with 3 billion living in developing nations in Asia and Africa. Currently, Unilever possesses a dominant market position in the challenging marketplace with issues like logistics, market development and product design requiring innovative and adaptive solutions. Solutions like Hindustan Unilever Limites use of the Shakti initiative, a program employing and empowering local women as sales agents and doing the majority of administration through a smartphone app. The adoption of a rural mindset with empathy and the incorporation of local knowledge proves to be the best way to access the rural consumer. With a saturated and heavily competitive urban market, the rural consumer proves to be an attractive market combined with increasing internet and cellular penetration giving the rural consumer greater awareness of products available. Unilever's inclusive approach to their plan for growth is both empowering to the local community and providing up to 3 billion consumers greater access to goods and services.
For more information see: www.hbr.org
Employing more older workers could deliver $78bn in economic gainsND
Fiona Smith, Guardian Sustainable Business, 1 December 2016.
The Australian Human Rights Commission estimates that twenty seven per cent of people over the age of fifty experience age discrimination at work. This bias has a serious and widespread economic impact. PwC’s Golden Age Index estimates that embracing older workers can reap Australia economic gains of up to $78bn.
While encouraging women in leadership and fighting racial and cultural discrimination is widely lauded, advocating for mature-age workers is not. “In the social debate, this is not a sexy thing to be seen to be doing,” says the managing partner of PwC’s People Business, Jon Williams”.
Some companies are heeding this advice. Westpac has set a target to increase the number of employees aged fifty and over to more than 20.5% by 2017. By early 2015 Westpac had reached 20.9%. Westpac was also the first corporate to introduce grandparental leave.
Commonwealth Bank and Bus Queensland are also leaders in this area.
For more information see: www.theguardian.com
Samsung halts production of Note 7 phone ND
Al Jazeera, 11 October 2016
Samsung Electronics has provisionally halted production of its Galaxy Note 7 smartphone after reports of fires in replacement devices. The announcement saw Samsung's share price dive by 4 percent.
"If the Note 7 is allowed to continue it could lead to the single greatest act of brand self-destruction in the history of modern technology," Eric Schiffer, brand strategy expert and chairman of Reputation Management Consultants, told Reuters news agency.
"Samsung should arrest the sale of Note 7's and protect the safety of their clients before profits and ultimately as a by-product protect Samsung. Samsung needs to take a giant write-down and cast the Note 7 to the engineering hall of shame next to the Ford Pinto."
Telstra has stated that Samsung had paused supply of new Note 7s to the company.
"Analysts are saying the recall could cost between $2bn and $5bn, and that was before this latest development," said Al Jazeera's Harry Fawcett, adding that some 2.5 million phones worldwide would need to be replaced.
Singapore Airlines said on Monday that charging of phone is prohibited on all its flights.
For more information see: www.aljazeera.com
The Forecasting Sweet Spot Between Micro and MacroND
Eddie Yoon, Jeremy Bartlow and Tim Joyce. Harvard Business Review 26 August 2016
Forecasting plays a major role in all modern business strategy, yet statistically businesses are fairly poor at it. In a survey with 500 senior executives, 1 per cent of their companies hit there 3 year financial forecast, only 5 were with 5 per cent of the original goal. The average rate of over/underestimating results was 13 per cent off, causing the fluctuation of share prices by an average 6 per cent. This occurs as the focus of forecasting is almost always on macro data such as GDP and fails to incorporate trends or the fluidity of consumption habits. When forecasting the HBR argues expanding the focus to ‘middle data’ such as wine consumption to determine disposable income, development, and the potential for higher demand, will create a more holistic and reliable forecast. For more information see: www.hbr.org
How big data will revolutionize the global food chainND
Clarisse Magnin, McKinsey and Company August 2016
Making the worlds food supply more efficient and reactive to demands is a key goal for a sustainable future. Currently 60% of the cost of goods sold are the raw materials with manufacturing and packaging representing the majority of the additional 40%, to minimise waste in both areas big data can analyse supply and demand. Demanding efficiency from the food production sector is essential when globally 795 million people go hungry and a third of food produced for human consumption is ‘lost or wasted’. Utilising big data through technologies like precision agriculture, which provides real time analysis of crops to allow farmers to adapt and apply ‘tailored care’ to maximise output or automated systems which increase delivery reliability and eliminates human error. Agricultural robotics appears to be a major growth industry with growth from $1 billion in 2014 to $14-18 billion by 2020. Utilising big data will ultimately make the production of food more productive with a greater potential for both higher yields and profits, a necessity in a world with a consistently expanding population. For more information see: www.mckinsey.com
When Corporate Philanthropy Makes the Recipient Look BadND
Yuliya Shymko & Thomas Roulet Harvard Business Review 24 August 2016
Gifts from the private sector to cultural non-governmental organisations (NGOs) have previously been seen almost ubiquitously as a positive thing. Corporate gifts offer opportunities to, expand, give greater job security, improve operations and undertake larger projects. Essentially accepting gifts from the private sector allowed NGOs to ‘amplify the positive impact of their activities upon society’. This often does not translate. The Academy of Management conducted a study to determine the correlation between corporate donations and the likelihood of being nominated for a prestigious theatre award in Russia between 2004 and 2011. They found (assuming equality of production) that for every corporate donors support the potential recipient is 10% less likely to be nominated for an award. The acceptance of corporate financing appears to undercut the artistic merit of the NGO, which the Royal Opera (UK) discovered when they accepted sponsoring from BP and had ’75 top classical musicians’ boycott or cut ties with the Royal Opera. For More Information see: www.hbr.org
The Economist, 20 August 2016
The American Psychiatric Association has routinely requested that its members refrain from psych-analysing any of the major candidates in the run up to the election. Psychoanalysis of a subject you have never met obviously possess ethical issues, but the profile of ‘narcissistic personality disorder’ and its symptoms of ‘abnormal attention-seeking, self-centredness, a sense of entitlement, exaggerated self-appraisal (i.e., fibbing about achievements) and warped relations with others’ appears to fit. The economist examines the Republican Party’s three key totems: Gods, guns and grit and how the party base of rugged individualism has been disrupted and re-routed towards narcissism. The claims of Ben Carson that god was telling him to run, Marco Rubio claiming that the gun he bought for Christmas was the ‘last line of defence’ against the Islamic State of Iraq, from his Florida home and Mitt Romney’s 2012 campaign claiming that small business owners had built the country with grit. The intentional inflation of both ego and individualism is firstly unnecessary, and secondly attacks interdependence which is a foundation of any democracy or civil society. For more information see: www.theeconomist.com
Why few records will be broken in RioND
The Economist 13 August 2016
The Rio Olympics, described by the Vice-President of the IOC as ‘the most difficult ever’ (perhaps overlooking Munich ’76) and perhaps the most underwhelming. While 17 swimming records were broken in Beijing 2008, just four have been broken in Rio. Mark Denny of Stanford University statistically determined the human speed limits for running events, with the quickest possible 100 metres time being 9.48, 0.11 seconds faster than Usain Bolt's record. The 100 metres is hampered by Rio, which is located at sea level and as such has ‘denser air’. Combined with the crack down on doping before the Olympics, ways in which to gain a competitive advantage on both current and historical competition is becoming far more challenging. Perhaps, Rio has shown that athletic aerobic and anaerobic sports are not going to be future crowd drawers, but rather skill-based disciplines such as gymnastics hold exciting record breaking potential. For more information see: www.theeconomist.com
What Could China’s ‘Social Credit System’ Mean for its CitizensND
Foreign Policy. Roger Creemers, Peter Mattis, Samantha Hoffman, Pamela Kyle Crossley. 15 August 2016
Using big data the Chinese government is intending to create a ‘social credit system’ to give a credit rating for individual civilians based upon civil obedience. The scheme is designed to use online and offline data to create a numerical score. The Shanghai municipal government released a list of 1,200 questions which would develop the score, 1,000 for companies and 200 for individuals. The feasibility of such a scheme is unlikely, due to the technological limitations and ultimately the impossible task of turning loyalty into a quantifiable score. It is unlikely that such a system could be installed nationally, the likelihood is that the system will be used to score individuals with influential occupations, such as doctors and teachers. While in the USA utilising similar data is used to create a FICO score, a scheme of this size and scope has never been attempted. Disgraced former security chief Zhou Yongkang argued pursuing this technology offers the government the ability to install a culture of self-censorship and civil obedience. This technology is ultimately designed to shape people's behaviour to become predictable to authorities. For more information see: www.foreignpolicy.com
Thailand Votes for a new constitutionND
The Economist, 8 August 2016
With a turnout of 55 per cent the Thai Army have passed a charter which introduces new electoral rules resulting in the weakening of any potential coalition government. Sixty five per cent of the vote endorsed the introduction of ‘independent’ commissions who will monitor politician’s policies and ‘moral conduct’. The Junta backed reform opposed by the US, UN and EU maintains the Thai system of stability from the military, legitimacy from the monarchy and bureaucracy from politicians. This reform comes during the IMFs prediction that Thailand’s growth has slowed from 5 percent in the mid-2000s to around 3 per cent, juxtaposing its immediate neighbours. The reform may offer stability to Thailand with the army now in firm control of the tumultuous election cycle, or the opposite with support for former Prime Minister Thaksin (2001-06) who was outed in a military coup remaining strong. For more information see: www.economist.com
IMF's own watchdog criticises its handling of eurozone crisisND
Larry Elliot, The Guardian, 29 July 2016
The International Monetary Fund’s handling of the Eurozone crisis has been failed by its own watchdog which found that it, failed to determine the scale of the problem, failed to create realistic forecasts and gave the impression Europe was gaining preferential treatment. The Independent Evaluation Office found that the IMF failed to appreciate the requirements of accountability and transparency within the banking system. Christine Lagarde, the managing director, argued the IMFs handling of the crisis, particularly in Greece, prevented the ‘contagious’ crisis spreading throughout Europe. The 2010 bailout was heavily politicised the Independent Evaluation Office found, a point Lagarde denies. For more information see: www.theguardian.com