How to Compete Against the New Breed of National Champions

Learned a lot lending an editorial hand here:

MIT Sloan Management Review, May 30, 2018

by Sharon Poczter, Aldo Musacchio, and Sergio G. Lazzarini

On March 12, 2018, the U.S. government blocked Broadcom Inc.’s proposed merger with Qualcomm Inc. on the grounds of national security. The presumption was that the merger of the two chipmakers would have resulted in a third company, China’s Huawei Technologies Co. Ltd., gaining a dominant position in the market for 5G mobile network technologies. Huawei is a “national champion” — a company that is heavily subsidized (either implicitly or explicitly) or, in some cases, owned by a government — and the U.S. government is concerned that its growth could provide the Chinese government with undue access to and control over U.S. communication networks.

While the threat posed by national champions is nothing new, their essential character has substantially changed, and the competitive advantage of national champions in the global marketplace has become more pronounced. Today’s national champions are much more sophisticated, competing in more industries, and harder to spot than ever before. As a result, Western companies need a new strategic guide for competing against them.
A New Breed of Competitor

Traditionally, national champions have been large industrial companies, subject to a high degree of direct governmental oversight and intervention. Typically, they are unresponsive to global competitive forces, depending instead on explicit government subsidizes and protection. For instance, Indonesia’s state-owned electricity provider, Perusahaan Listrik Negara, enjoys a government-created monopoly, but its inability to satisfy growing domestic demand has resulted in a costly and unreliable energy supply in the world’s fourth most populous country.

Today, however, there is a new breed of national champions. They differ from traditional champions in two principal ways: the form and degree of their government connections, and their basis of competition.

Modern national champions can be hard to identify. Their connections to government take a variety of forms, both corporate and noncorporate (via sovereign and other investment funds). The degree of government ownership and intervention in these national champions also varies widely. Sometimes governments hold explicit majority or minority ownership stakes in these companies, but increasingly, government involvement is more implicit...Read the rest here.

Why AI Isn’t the Death of Jobs

Learned a lot lending an editorial hand here:

MIT Sloan Management Review, May 24, 2018

by Jacques Bughin

When pundits talk about the impact that artificial intelligence (AI) will have on the labor market, the outlook is usually bleak, with the loss of many jobs to machines as the dominant theme. But that’s just part of the story — a probable outcome for companies that use AI only to increase efficiency. As it turns out, companies using AI to also drive innovation are more likely to increase head count than reduce it.

That’s what my colleagues and I recently learned through the McKinsey Global Institute’s broad-based research initiative aimed at understanding the spread of AI in economies, sectors, and companies. We polled 20,000 AI-aware C-level executives in 10 countries to compile a sample of more than 3,000 companies (mostly large), identified distinct clusters within that pool, and ran a variety of scenarios on those clusters to project the effects of AI on employment, revenue, and profitability.

This research and analysis suggest that although AI will probably lead to less overall full-time-equivalent employment by 2030, it won’t inevitably lead to massive unemployment. One major reason for this prediction is because early, innovation-focused adopters are positioning themselves for growth, which tends to stimulate employment. Read the rest here.

How Human-Computer ‘Superminds’ Are Redefining the Future of Work

Learned a lot working on this book adaptation:

MIT Sloan Management Review, May 21, 2018

by Thomas W. Malone


The ongoing, and sometimes loud, debate about how many and what kinds of jobs smart machines will leave for humans to do in the future is missing a salient point: Just as the automation of human work in the past allowed people and machines to do many things that couldn’t be done before, groups of people and computers working together will be able to do many things in the future that neither can do alone now.

To think about how this will happen, it’s useful to contemplate an obvious but not widely appreciated fact. Virtually all human achievements — from developing written language to making a turkey sandwich — require the work of groups of people, not just lone individuals. Even the breakthroughs of individual geniuses like Albert Einstein aren’t conjured out of thin air; they are erected on vast amounts of prior work by others.

The human groups that accomplish all these things can be described as superminds. I define a supermind as a group of individuals acting together in ways that seem intelligent.

Superminds take many forms. They include the hierarchies in most businesses and other organizations; the markets that help create and exchange many kinds of goods and services; the communities that use norms and reputations to guide behavior in many professional, social, and geographical groups; and the democracies that are common in governments and some other organizations.

All superminds have a kind of collective intelligence, an ability to do things that the individuals in the groups couldn’t have done alone. What’s new is that machines can increasingly participate in the intellectual, as well as the physical, activities of these groups. That means we will be able to combine people and machines to create superminds that are smarter than any groups or individuals our planet has ever known...Read the rest here

Your Customers May Be the Weakest Link in Your Data Privacy Defenses

Learned a lot lending an editorial hand here:

MIT Sloan Management Review, May 22, 2018

by Bernadette Kamleitner, Vincent W. Mitchell, Andrew Stephen, and Ardi Kolah

Does your company have consumer data it isn’t legally authorized to possess?

Don’t be too quick to answer. Many ethical, lawfully managed businesses do have such data — and it comes from a surprising source: their customers, who inadvertently share the personal data of their family, friends, and colleagues.

The lack of awareness regarding peer-dependent privacy is one way that London-based Cambridge Analytica Ltd. was able to collect the personal information of more than 71 million Facebook users, even though only 270,000 of them agreed to take the now-bankrupt company’s app-based personality quiz. Cambridge Analytica reportedly knew what it was doing, but any company that accesses customer data, such as contacts, call logs, and files, can unknowingly breach peer privacy.

Blame apps. Virtually all large companies offer apps to their customers, and most of those apps access and collect customer data. Often, that includes peer data, which also is collected even though the app’s owner may have no direct relationship with the user’s peers.

Consider a typical scenario: John installs a customer club membership app on his smartphone. During this process, the app requests permission to access core services on his device, including his contacts. John agrees. This opens a Pandora’s box of potential problems. John has given a third party — the company owning the app — permission to access not only his personal data, but also the personally identifiable information of the hundreds of contacts saved in his phone. None of those people, including Rachel, whose name, phone number, email address, photo, and date of birth are stored in John’s phone, agreed to share their information with the company. They have no idea that they have been caught up in a peer-dependent privacy breach.

Company executives may be no more aware of the privacy breaches built into their apps than John and his contacts. Yet, it could cost them as dearly. Under the EU General Data Protection Regulation (GDPR), any company can incur fines of up to 4% of global annual revenue or 20 million euros, whichever is greater, for failing to respect the sovereignty of EU citizens over their personal data. Notably, these fines are not limited to customer data: As of May 25, 2018, the personal data of EU citizens, including data on other people’s devices, must be obtained lawfully, fairly, and transparently in accordance with the principles of the GDPR. This implies that the fully informed consent of peers is needed prior to taking possession of their personal data (barring some other legal basis). In most cases and subject to a balancing test, companies also need to provide peers with access to their personal data and, in some cases, delete that data on demand.

In short, peer-dependent privacy has become a significant exposure for companies that want to ensure the highest standards of data protection, privacy, and regulatory compliance....read the rest here

An Ode to the Thief of Time

strategy+business, May 11, 2018

by Theodore Kinni

In late 1934, a department store magnate named Edgar Kaufmann engaged Frank Lloyd Wright to design a weekend home in the woods an hour or so southeast of Pittsburgh. It was a huge boon for Wright — his reputation had waned, commissions had dried up in the Depression, and his home and studio were threatened with foreclosure. The architect visited the Kaufmann site, asked for a survey, and then, the story goes, didn’t do a damn thing.

Nine months later, Kaufmann unexpectedly visited Wright’s studio to look at the design for his new home, which, he had been told, was progressing beautifully. Wright reportedly put pencil to paper for the first time. Two hours later, he presented Kaufmann with a plan for Fallingwater, an acknowledged masterpiece of residential architecture.

“The only way to explain the nine months Wright spent not working on Fallingwater is by procrastination’s perverse logic. Nothing was the only thing that could be done in such a situation,” writes Andrew Santella in Soon, his engaging, meandering, and, of course, overdue exploration of the behavioral tic...read the rest here

If You Cut Employees Some Slack, Will They Innovate?

Learned a lot lending an editorial hand here:

MIT Sloan Management Review, May 4, 2018

by Yasser Rahrovani, Alain Pinsonneault, and Robert D. Austin

The idea of using slack resources — in the form of time, technology, and support — to bolster employee innovation falls in and out of favor. The return on slack innovation programs can be prodigious: 3M Co. attributes the development of the Post-it Note to its 1948 decision to allow employees to devote 15% of their paid time to side projects; and Google says its “20% rule,” which upped the ante on slack time devoted to innovation, yielded Gmail, AdSense, and Google Earth. But few, if any companies, have stuck with time off for innovation and other slack-based programs for as long as 3M. Even Google has reportedly waxed and waned in its commitment to its 20% rule.

Given the significant investment that slack-based innovation programs require, the decision to adopt one shouldn’t be made off the cuff. But what are the factors underlying that decision and how should such programs be designed? To begin to answer these questions, we conducted in-depth interviews of knowledge workers in different industries to understand what motivated them to take risks and explore new ideas, and, more specifically, whether and how slack resources might have contributed to their innovativeness. We then created and refined an empirical model based on the factors and relationships that appear to influence employee innovation and tested it using a sample group consisting of 427 employees from North American companies.

We found that different types of employees respond in different ways to slack innovation programs; that different kinds of slack resources are better suited to certain types of employees than they are to others; and that different kinds of slack innovation programs produce different kinds of innovation. Companies can use these findings to design more effective slack innovation programs and maximize their returns on slack resources...read the rest here

The Future of Work is Human + Machine

Learned a lot lending an editorial hand here:

Boss Magazine, May 2018

by David Mallon

The debate surrounding today’s smart machines often reminds me of the legend of John Henry, which dates from the dawn of the Second Industrial Revolution. You may remember John Henry as the “steel-driving man” who went head-to-head against a steam-powered hammer to prove that a man could outperform a machine. He won the contest, but his heart burst in the effort and John Henry died.

In the modern version of that American folktale, machines are coming to take away our jobs again. This time, it is robotics, artificial intelligence, and other digital technologies that will supposedly transform our companies into employee-less buildings filled with automatons. However, as I read through our research at Bersin and the thought leadership being produced throughout Deloitte, I’m seeing a very different story.

For instance, when our Deloitte colleagues analyzed the impact of automation and robotics in the UK from 2001 to 2015, they discovered that more than 800,000 jobs had been lost, but nearly 3.5 million new jobs had been created. Moreover, on average, those new jobs paid nearly £10,000 more annually than the lost jobs.

Based on findings like these, I’ve become convinced that the real story is not an adversarial one in which human is pitted against machine. Instead, the future of work is a story of an augmented workforce—a story of human + machine.

There will be disruptions in the augmented workplace, too. To be able to successfully navigate them, companies and employees will need to act in ways that help ensure human + machine adds up to a sum greater than its parts...read the rest here