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Thursday, January 26, 2017

India ranks sixth on eight great powers in 2017: magazine 01-27

India is ranked at the sixth spot, behind China and Japan, in a list of eight great powers for the year 2017 by a leading American foreign policy magazine which is topped by the US. The list is topped by the US, whereas Chin and Japan are at tie for being on the second spot. Russia (fourth) and Germany (fifth) are the other two countries ahead of India. Iran is ranked seventh and Israel is on the eighth spot. "Like Japan, India is often overlooked in lists of the world's great powers, but it occupies a rare and enviable position on the world stage," The American Interest magazine said in its latest annual report of eight great powers.

India is the world's largest democracy, home to the second-largest English-speaking population in the world and boasting a diversified and rapidly growing economy, it said. On the geopolitical front, India has many suitors: China, Japan and the United States are all seeking to incorporate India into their preferred Asian security architecture, while the EU and Russia court New Delhi for lucrative trade and defence agreements, it noted. "Under the leadership of Prime Minister Narendra Modi, India has deftly steered its way among these competing powers while seeking to unleash its potential with modernising economic reforms," it said.

According to the magazine, despite internal problems in the aftermath of demonetisation, and the Pakistan scare, India found its footing elsewhere in 2016. "Long hesitant to pick sides, New Delhi took several clear steps this year to deter a rising and aggressive China, announcing that it would fast-track its defence infrastructure projects in the Indian Ocean, amid fears that China was trying to encircle India with a 'string of pearls'," it said.

"Likewise, Modi explored new naval cooperation with both the US and Japan, and signed a host of defence deals with Russia, France and Israel to modernise the Indian military," it observed. "From the Middle East and East Africa to Southeast Asia, India is making its presence felt in both economics and security policy in ways that traditional great powers like Britain and France only wish they could match," The American interest said.

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Sunday, January 22, 2017

Unexpected Benefits of Digital Transformation 01-22

Digital tools can be used in many different “right” — and surprising — ways to add value to an organization.

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 Image credit : Shyam's Imagination Library 

                                                                                                                                                           Many different fields of study — such as psychology, human-computer interaction, and ecology —
have employed the concept of “affordances.” The term refers to the different possible actions that someone can take with an object in a particular environment. For example, someone can interact with a beach ball by batting it in the air, letting it float in water, sitting on it, or popping it. The importance of affordances is the shift in focus from the characteristics of the object to what one can do with an object in a particular situation.

The concept of affordances can be particularly useful when applied to digital technologies in organizations. It overcomes many of the key mistakes companies make when trying to update their organizations to compete in an increasingly digital environment.

Having the Technology Is Not Enough

Perhaps the most fundamental implication introduced by the concept of affordances is the shift from the characteristics of the technology itself to what your company can actually do with it. Digital technologies only enable possible actions for people and organizations to engage in; they do not make those actions happen on their own. Simply owning or implementing digital technologies is not enough to derive business value from it.

This insight may sound obvious, but it is stunning how often managers forget this simple fact in practice. They either believe that the mere adoption of the latest technology will improve their business prospects, or they focus all of their efforts on implementation without applying the time or resources to make the types of organizational changes needed to benefit from the possibilities the technologies offer.

For example, one company adopted Twitter in order to be more responsive to customers, but it kept existing processes in place — processes that required multiple approvals before publicly responding on behalf of the company. This negated the benefit of Twitter because it limited the way the technology could be used to respond quickly to customers. This example may be egregious, but it is common for companies to adopt digital technologies without considering how work needs to change to take advantage of the benefits they enable.

There Are Many Different ‘Right’ Ways to Use Digital Technologies

Just as a beach ball can be used in a number of different ways, so can digital technologies enable a number of different possible actions within organizations. One of Twitter’s greatest strengths (and a reason many people and companies find it confusing) is the multiple possible actions it can enable. Some companies — many of the major media outlets, for example — use Twitter as a means of broadening the reach of their content. Others, such as Delta, JetBlue, and KLM, use Twitter as an effective customer service tool, enabling them to support customers in a very fluid service environment. Still others use Twitter as a business intelligence tool. Companies such as Kaiser Permanente used data generated by companies on Twitter to identify areas of improvement in business operations, and T-Mobile used it to identify competitors’ weaknesses to inform their business strategy. The concept of affordances brings the question of how a particular technology will be used within an organization to the forefront.

The Most Valuable Applications Aren’t Always Known in Advance

The affordance literature also introduces the concept of “hidden” affordances, which describes possible actions enabled that are not necessarily known in advance, which is also true of digital technologies in organizations. For example, one company adopted an expertise identification tool to help determine who in the organization needed knowledge. The tool analyzed digital content generated by employees and automatically generated knowledge profiles for them. Although the intention of the technology was to make others in the organization aware of what knowledge employees possessed, the greater impact was in helping employees understand what knowledge they possessed that was most valuable to others. This often differed considerably from their formal roles or how the employees thought they were most valuable. In another organization, the same technology had a very different unanticipated impact, helping improve the performance of women, lower-rank, and newer employees. The technology democratized access to knowledge in the company, access that had previously been controlled through the social networks of senior male employees. Recognition of hidden affordances helps keep managers aware of unexpected or unanticipated benefits of digital technologies that may not have been considered in advance.

A Digital Organization-Affordance Cycle

The final benefit of an affordance view of digital technologies in organizations is the recognition of a mutually dependent relationship between the organization and its digital technologies. Digital technologies can change the organizational environment of which they are a part, creating the

possibility of a new set of affordances. Organizations can also implement or emphasize new features in the digital technologies, as the most valuable affordances they enable become more apparent. An affordance perspective suggests that digital transformation, rather than a linear progression, is a recursive process in which technologies and the organizational environment mutually influence one another over time. Digital technology creates new opportunities to work differently, and working differently creates new opportunities to infuse technology into the work process.

Shifting toward an affordance view requires managers to shift from thinking about digital tools themselves to a focus on what the tools help companies do differently. As managers think about whether these changes in how work happens will add value to an organization, they will be able to more easily consider what legacy technologies fulfill similar tasks, and whether these different systems will complement or compete with one another. 

Reproduced from MIT Sloan Management Review


Competing Through Joint Innovation 01-22

The Chinese telecommunications company Huawei recently has made significant inroads into European markets using a strategy of innovation partnerships with customers and governments.

Image credit : Shyam's Imagination Library

Emerging markets such as China and India have become the growth drivers of corporate R&D initiatives from all around the world. Although there is growing evidence that Chinese companies are shifting their innovation focus from cost savings to knowledge-based research, the view by many in the West remains that companies based in emerging markets are not ready to take over the role of leading innovators from their Western competitors. As a result, Chinese multinationals have been at a competitive disadvantage, particularly in strategic technology industries.

What can Chinese multinationals do to overcome Western barriers to entry in strategically important technology industries in which “Made in China” or “Designed in China” are viewed as negatives? What dynamic innovation capabilities — or, put another way, what culturally specific processes — should companies focus on to gain acceptance in the competitive global marketplace?

To answer these questions, I studied Huawei Technologies Co. Ltd., the Chinese telecommunications company that has recently made significant inroads in Europe’s mature and strategically important telecommunications industry. (See “About the Research.”) Huawei, which is based in Shenzhen, is one of the first Chinese multinationals to be competitive in the West in a strategic technology industry, making it a potential role model for companies in China and other parts of Asia that hope to transition from being a follower to being a market leader.

To achieve its position, Huawei has aggressively pursued a strategy of joint innovation with leading European customers and governments. In this article, I will discuss how Huawei worked closely with European customers to develop joint innovation capabilities. In the process, the company was able to emerge as a leader in telecommunications in Europe.

Engaging With Startups in Emerging Markets 01-22

Startups in developing economies are addressing local problems through creative technologies and solutions. For large global companies, the prospect of working with such startups is appealing — and complicated.

For large global companies, forging effective partnerships with high-potential startups is easier said than done. The very traits that make such startups potentially complementary as partners also make it difficult for large companies to engage with them in the first place. Multinational corporations often struggle even to identify promising potential startup partners; startups, for their part, find it difficult to identify and reach the relevant decision makers within the often-confusing hierarchies of gigantic multinational companies.

The challenge, for both sides, is all the more vexing in emerging markets. Furthermore, most academic studies of the challenges that large companies and entrepreneurial ventures face in partnering — and the solutions the studies suggest — focus on mature markets, such as the United States and Europe. Far less is known about how multinational corporations should engage with startups in emerging markets such as China and India — even though those markets already boast the presence of prominent multinational companies such as Amazon, Google, IBM, Microsoft, and SAP.

To understand how multinational companies have partnered successfully with startups in emerging markets, we undertook a study in three major emerging market economies: India, China, and South Africa. (See “About the Research.”) Our research uncovered four key factors that multinational companies confront in such partnerships in emerging markets. We also unearthed four strategies — one corresponding to each of the factors — to help global companies engage with startups in emerging markets more effectively. (See “Key Factors in Partnerships With Startups in Emerging Markets.”) While some factors may be more potent than others for a given multinational corporation, all four of these strategies are worth paying attention to. They are mutually reinforcing, interrelated strategies and should be viewed holistically rather than in a piecemeal fashion.

Squeezing more ideas from product teardowns 01-22

Some companies are using product teardowns to dismantle silo culture in product development.

Engineers and purchasers love product teardowns—the practice of dismantling products into parts as a way to spark fresh thinking. Few manufacturers, however, elevate the practice above Skunk Works status, and many executives pigeonhole it as a tactical exercise in cost cutting. Some companies, however, are throwing open the doors of their Skunk Works labs and using teardowns as opportunities to increase cross-functional collaboration. Along the way, they are saving more money, capitalizing better on customer insights, and improving the revenue potential of their products.

Technophiles of all stripes love product teardowns—the timehonored practice of dismantling products to their constituent parts to spark fresh thinking. Yet few manufacturers get the full value teardowns afford. Many senior executives marginalize the practice, viewing teardowns as Skunk Works exercises for engineers  or cost-cutting tactics on the part of the purchasing department. Such views retard creativity and ensure that the ideas generated  in teardowns go unexplored, moldering in functional silos.

But some companies go further. This interactive explores marginimprovement opportunities from teardowns that we’ve identified in our research and examines how companies are rethinking  their approaches to teardowns to save more money, break down the silo mentality, and even improve the revenue potential of  their products.

Industrial: Redesign for lower costs A manufacturer of materialshandling equipment was developing a new forklift truck with the goal of minimizing  both its own manufacturing costs and the customers’ cost of operating the product. Recognizing that the vehicle’s weight was the key design factor (a lighter vehicle would require less fuel to run  and would have lower materials costs) the company’s R&D engineers conducted systematic teardowns of competitor’s products to study new design possibilities.

Meanwhile, executives brought in marketers, who learned that customers would indeed value the  lower cost of ownership—and reduced CO2 emissions—brought about by the new design, but they would be unwilling to pay a premium for them. This knowledge spurred the company’s engineers and purchasers to work together to reduce the weight of the new forklift truck by 7% (200 kg), while ultimately lowering manufactur- ing costs by 12% through a combination of design changes, sourcing from low-cost countries, “clean-sheet” costing, and other traditional approaches.

The resulting vehicle con- sumed 4% less fuel than  its predecessor and emitted eight tons less CO2 over  its lifespan—making it more appealing to customers.

Front-tire diameter reduced, and front axle moved closer to payload allowing for lighter counterweight in rear of vehicle

Engine, gearbox moved closer to rear of vehicle, shifting center of gravity rearward to support new counterweight Counterweight reduced, repositioned to support vehicle’s new center of gravity
Front-tire diameter reduced, and front axle moved closer to payload allowing for lighter counterweight in rear of vehicle

Changes in fan design  from blower fan to box fan: 35% cheaper

Elimination of metal base-plate on product’s  cart: 4% reduction in cost of cart

Integrated plug and fuse assembly: 12% cheaper; faster to assemble

Fewer printed circuit  boards (PCB): 14% reduction  in PCB cost

Self-tapping screws  versus threaded inserts:  50% cheaper

High tech: Break down silos A medical-products company planned a series of teardowns to improve the design of its therapeutic medical device. To generate new ideas, executives invited colleagues from purchasing, marketing, engineering, and sales to see how their product stacked up against four rival ones.

Seeing the products together was an “Aha!” moment for the purchasers, who quickly identified a series of straightforward design changes that, while invisible to customers, would significantly
lower the cost of manufacturing the device. Meanwhile, seeing the configurations of competitors’ circuit boards spurred the team’s salespeople, marketers, and engineers to discuss the manufacturing implications of the company’s modular approach to design. The engineers had long assumed that being able to mix and match various features after final assembly was advantageous and had emphasized this capability in the product’s design. Yet the salespeople reported that most customers hardly ever ordered more than a handful of modules at purchase and rarely ordered more after assembly.

The conversations ultimately led to simplifications in the product’s circuitry that lowered purchasing costs  by 23% and helped marketers identify a new customer segment where the product might command a higher price.

Consumer goods: Reduce packaging costs The use of product teardowns extends to a product’s packaging too. However few companies examine the cost of trade-offs implicit in their packaging decisions, much less look to their competitors for ideas. Such decisions tend to be the domain of
marketers, given the importance of packaging in communicating a company’s brand to consumers. Yet we have seen organizations reap considerable savings. One consumer goods maker we know reduced its packaging costs for a key product by 10% by making straightforward design changes that allowed it to use less plastic in manufacturing the product’s bottle.

In this example, based on McKinsey research into packaging and manufacturing costs in the European fast-moving-consumergoods industry, we highlight selected cost trade-offs associated with shampoo.

S h a m p o o
S h a m p o o S h a m p o o
Recycled materials. White or clear-colored


Saturday, January 21, 2017

How to Monetize Your Data 01-22

These days, most companies are awash in data. But figuring out how to derive a profit from the data deluge can help distinguish your company in the marketplace. 

Image credit : Shyam's Imagination Library

The possession of rich amounts of data is hardly unique in today’s world. Indeed, data itself is increasingly a commodity. But the ability to monetize data effectively — and not simply hoard it — can be a source of competitive advantage in the digital economy.

Companies can take three approaches to monetizing their data: (1) improving internal business processes and decisions, (2) wrapping information around core products and services, and (3) selling information offerings to new and existing markets. These approaches differ significantly in the types of capabilities and commitments they require, but each represents an important opportunity for a company to distinguish itself in the marketplace.

Theoretically, companies can pursue more than one approach to data monetization at the same time. In practice, adopting each approach requires management commitment to specific organizational changes and targeted technology and data management upgrades. Thus, it’s best to identify your most promising opportunity and start there. In doing so, you will enhance your data in ways that will accelerate subsequent efforts related to the other approaches. More importantly, you’ll build your company’s capacity for monetizing its data.

Improving Internal Processes

Using data to improve operational processes and boost decision-making quality may not be the most glamorous path to monetizing data, but it is the most immediate. Executives often underestimate the financial returns that can be generated by using data to create operational efficiencies. Companies see positive results when they put data and analytics in the hands of employees who are positioned to make decisions, such as those who interact with customers, oversee product development, or run production processes. With data-based insights and clear decision rules, people can deliver more meaningful services, better assess and address customer demands, and optimize production.

When Satya Nadella became CEO of Microsoft Corp. in February 2014, he urged employees to find ways to improve the company’s processes with data. Within sales, executives believed that, with the right tools and systems, they could improve the productivity of their salespeople by 30%. To do so, Microsoft’s sales leaders sought to deploy tools that would help salespeople spend more of their time engaging with customers — and in more effective ways — by arming them with key computed insights such as how likely a sale is to close and when.

To deliver actionable insights, sales executives first had to define shared concepts (for example, what is meant by “a lead”). They then needed to locate data sources that could be used to calculate performance. They quickly learned that sales data was located in too many different systems to easily create a comprehensive snapshot of a salesperson’s business. Within a year, they created a new, integrated customer system that could produce 360-degree views of Microsoft’s relationships with corporate customers, including what those customers bought, what issues they encountered, and how the company engaged with them.

The new system saved 10 to 15 minutes per sales opportunity by eliminating the need for Microsoft salespeople to manually search for and prepare data. The system also helped sales executives more accurately manage their pipelines; it used predictive analytics and machine learning to compute the likelihood of a successful sales engagement based on data that the salesperson provided about an opportunity. For example, buying and deploying enterprise software is complex and often requires a partner’s involvement, so the system may calculate a higher likelihood for success when customers already have partners involved. Information about an opportunity’s likelihood of success, along with suggestions on how to advance engagements along the sales pipeline, helped salespeople prioritize their leads and act in ways most likely to achieve their goals. Over time, Microsoft salespeople learned how to forecast more accurately (for example, the accuracy of forecasts regarding global accounts has risen from 55% to 70%), which has led to better sales-pipeline data and, in turn, improved pipeline management.

Wrapping Information Around Products

Most companies have opportunities — often quite significant ones — to enrich their products, services, and customer experiences using data and analytics, a phenomenon that we call “wrapping.” Companies are wrapping their offerings with data to escape commoditization and satisfy increasingly hard-to-please customers — with the goals of generating sales increases, higher prices, and deeper customer loyalty. FedEx Corp. was an early exemplar of wrapping when it introduced online package tracking as a free service in the 1990s. Now examples abound as companies bundle reporting, alerts, and other information to add value to products ranging from credit cards to health monitors.

Wrapping is a creative exercise in which companies identify what problems their customers have and then find ways to solve those problems using data and analytics. For example, Capital One Financial Corp., a diversified bank based in McLean, Virginia, learned that many of its credit card holders are concerned about fraudulent transactions but find the task of examining every charge to be tedious. So the company helps customers identify fraud more easily and more quickly by displaying merchant logos and maps with each transaction in online statements. The visual cues jog cardholders’ memories about whether they made a purchase or not. As a result, customers are more satisfied with the credit card and more likely to use it more often.

Johnson & Johnson has discovered the value of providing pattern identification to users of its health-monitoring products, including those for diabetics. The company offers its OneTouch Verio Sync Meter customers historical reporting on their blood glucose levels along with tools to help them understand patterns of changes. The reporting is intended to help customers identify the possible causes for the glucose level variations and thus identify behavioral changes that can result in healthier living.

Wrapping activities are best viewed as extensions of a company’s product management processes. This means offering data and analytics to customers at the same level of quality as the core product. Doing so requires comparable levels of scrutiny and control. Most companies don’t manage and cannot deliver data and analytics in this way. In fact, exposing data to customers could reveal quality problems and a lack of analytical sophistication. Thus, in most cases, wrapping requires companies to “up their game” in their information capabilities so that wrapping doesn’t damage their reputation or undermine their value proposition. This effort may entail heavy investment in data-quality programs, advanced computing platforms (for instance, Hadoop), or data-science talent.

Selling Data

Many executives are eager to sell their company’s data, convinced that it has inherent value and can generate important new revenues for the company. We caution that selling represents the hardest way to monetize data, mainly because it requires a unique business model that most companies are not set up to execute. Yet it can be done to potentially great effect under the right circumstances.
State Street Corp. is a Boston, Massachusetts–based financial services company that reported $10.4 billion in 2015 revenue. It provides products and services to institutional investors such as mutual funds, corporate and public retirement plans, and insurance companies.

In 2013, State Street announced a new information-business division called State Street Global Exchange that would combine existing State Street data and analytics capabilities with new research to develop information-based solutions that clients would be willing to buy independently of the company’s core services. State Street established a new division for the information business in recognition of its unique business model needs — something the company had not done in 30 years.

Even though it started out as a discrete unit, State Street Global Exchange focused on developing products that were tightly associated with State Street’s core business. For example, State Street is one of the largest administrators of private equity assets, which means that it collects data about the financial capital that is not noted on a public exchange; this kind of data is of great value to markets that require an accurate representation of the private equity industry. State Street Global Exchange appreciated that the data was not automatically monetizable. Executives secured permission from 3,000 private equity clients to aggregate and anonymize that data — and then created an index that conveyed the financial performance of the private equity industry.

State Street leaders realized that they would need an entirely new operating model to support the information business. For one, sales processes had to change because, although State Street Global Exchange often sold to State Street clients, a buyer of Global Exchange products was frequently a different person or cost center than the kind of buyer traditional State Street products attract. In addition, the information business required salespeople with different selling experience and skills in selling stand-alone data and analytics-based products.

State Street understood that establishing an information business is hard and takes time. State Street Global Exchange had to learn to achieve balance between maintaining key ties with State Street (to create benefits from being a part of the larger organization) and responding quickly to new markets and new needs. Executives believe that State Street Global Exchange is gaining significant traction with its clients — and that their commitment will pay off. But we caution that such a model is not easy to replicate. Other companies should think carefully about the operational capabilities, investment, and commitment required to successfully sell data.

The Importance of Accountability

Chances are you have two major obstacles to monetizing your data. The first is the accessibility and quality of your data. Our research has found that only about a quarter of companies offer employees and customers easy access to the data they most need. You can’t monetize data no one can use.
The second obstacle is lack of accountability. All three approaches to data monetization require committed leaders who can redirect the behaviors of employees to deliver an important new value proposition.

Your inclination may be to solve the data quality issue first with big investments in new infrastructure. We propose that addressing the second issue of accountability will create urgency and commitment to addressing data quality issues — and so we recommend starting there.
Data monetization through process improvement requires strong process leaders. These leaders systematically use data to analyze the outcomes of existing processes and test hypotheses about proposed improvements. At Microsoft, for example, sales managers designated specific people to reshape and institutionalize new ways of selling. Process leaders are ultimately responsible for the design of best practices, the capture of the right data, the availability of tools, and the training of all staff regarding how to use data to do their jobs.

Data monetization through wrapping requires strong product leaders. These leaders treat the data that accompanies a core product or service much like any other product innovation — they hold it to the same quality standards. At Capital One, product leaders know the value of adding a data or analytics feature to a credit card because they predict — and then track — the lift in revenue from the information as well as the cost of providing it. Product leaders assemble teams to design experiments and methodologies that help analyze the impacts of information features and make appropriate adjustments.

Monetizing data by selling it requires a strong business-unit leader. That leader, in turn, must assemble a team that can launch and grow what is for most companies a new line of business. The head of that business will start by ensuring the value of the data and related services to potential customers. But the business head and his or her team must also design data, analytics, and dashboards to monitor the business and enable rapid response to new business opportunities.
Each of the data-monetization strategies requires new processes, new skills, and new cultures to generate maximum returns. Companies with data-monetization experience have learned that it is insufficient to simply put data and tools into the hands of employees. Microsoft refined goals, cleaned up data, honed reports and algorithms, grew talent, and changed habits. Capital One and Johnson & Johnson reshaped product-management talent, platforms, and capabilities. State Street redesigned its organization and created a new profit formula that would generate stand-alone revenues from information.

Impressive results from data monetization do not transpire from single “aha” moments. Instead, they stem from a clear data-monetization strategy, combined with investment and commitment.

Jack Ma: America has wasted its wealth 01-22

Jack Ma, one of China’s most successful and richest entrepreneurs, has responded to America’s growing globalization backlash, arguing that the superpower has benefited immensely from the process – but that it has largely squandered its wealth.

“American international companies made millions and millions of dollars from globalization,” Ma – the founder of Alibaba, the world’s largest online retailer – told participants on the second day of Davos. “The past 30 years, companies like IBM, Cisco and Microsoft made tons of money.”
The question is: where did that money go? It was wasted, Ma explained.

“In the past 30 years, America has had 13 wars at a cost of $14.2 trillion. That’s where the money went.” He also questioned America’s decision to bankroll Wall Street after the 2008 financial crash, arguing the money would have been better spent in other areas.

“What if they had spent part of that money on building up their infrastructure, helping white-collar and blue-collar workers? You’re supposed to spend money on your own people.”

It’s not globalization – and everything that comes along with it, like free trade and outsourcing – that’s to blame for America’s woes. It’s the way the country’s elite managed the process.
“It’s not that other countries steal American jobs; it is your strategy – that you did not distribute the money in a proper way.”

But it wasn’t all doom and gloom in the session. In fact, Ma remains hopeful that globalization can still be a great force for good – for both the US and China. It just needs to be reformed.
“I believe globalization is good, but it needs to be improved. It should be inclusive globalization.”
Ma thinks that should be achievable – and he says President-elect Donald Trump is on board with him. “He’s open-minded and he’s listening,” he told participants.

The two men met recently in New York and had a lot more in common than might be expected.
“We spoke about how we can help small American businesses sell their products in China and Asia through our network, which can create a lot of jobs for them.”

For all the talk of trade wars between the two economic powerhouses, Ma says that’s unthinkable, and thinks they would instead benefit from working together on this more inclusive form of globalization.

“China and the US will never have a trade war… It would be a disaster for both countries and the world.”

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Brain stimulation used like a scalpel to improve memory 01-22

Northwestern Medicine scientists showed for the first time that non-invasive brain stimulation can be used like a scalpel, rather than like a hammer, to cause a specific improvement in precise memory.
Precise memory, rather than general memory, is critical for knowing details such as the specific color, shape and location of a building you are looking for, rather than simply knowing the part of town it’s in. This type of memory is crucial for normal functioning, and it is often lost in people with serious memory disorders.

“We show that it is possible to target the portion of the brain responsible for this type of memory and to improve it,” said lead author Joel Voss, assistant professor of medical social sciences at Northwestern University Feinberg School of Medicine. “People with brain injuries have problems with precise memory as do individuals with dementia, and so our findings could be useful in developing new treatments for these conditions.”

By stimulating the brain network responsible for spatial memory with powerful electromagnets, scientists improved the precision of people’s memory for identifying locations. This benefit lasted a full 24 hours after receiving stimulation and corresponded to changes in brain activity.
“We improved people’s memory in a very specific and important way a full day after we stimulated their brains,” Voss said.

The paper was published Jan. 19 in Current Biology.

The research enhances scientific understanding of how memory can be improved using non-invasive stimulation. Most previous studies of non-invasive brain stimulation have found only very general and short-lived effects on thinking abilities, rather than highly specific and long-lasting effects on an ability such as precise memory.

The scientists used MRI to identify memory-related brain networks then stimulated them with non invasive electromagnetic stimulation. Detailed memory tests were used to show that this improved spatial precision memory, and EEG was used to show that these memory improvements corresponded to indicators of improved brain network function.

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Thursday, January 19, 2017

And now: President CEO : An opnion from Harvard Business School Faculty. 01-20


Donald John Trump, the 45th U.S. president, will be the first to go straight from the boardroom to the Oval Office without any political experience or military service.

During the 2016 campaign, Trump parlayed his fame as a celebrity real estate developer into a winning pitch to voters as a Washington outsider. Emphasizing his decades of experience as a wheeler-dealer building luxury hotels, casinos, and golf courses around the world, Trump pledged to use his business savvy and hard-charging leadership style to “drain the swamp” of the Washington bureaucracy and deliver results for the American people.

The United States is not a company, of course, and its citizens are not employees, but voters still were drawn to his promises of a fresh approach to governing. So what skills and perspectives might the wealthy businessman draw on as he transitions from CEO to commander in chief?
To get a better sense of the months ahead, The Gazette asked Harvard Business School (HBS) faculty members how Trump’s nearly 50 years of experience in building a global corporate empire might shape his approach to the presidency. Their insights follow.

Real estate rarely a zero-sum game

John D. MacomberSenior lecturer of business administration

You have to start by distinguishing between a branding operation that’s supported by other activities, like Disney Hotels, and pure real estate [companies], like Boston Properties and Vornado. Trump is primarily a branding operation.

There are many sectors in real estate. Hospitality is one of them. In hotels, there are usually three parts to every deal. Usually, there’s one entity that owns the land and owns the building. There’s a different entity that likes to do operations like housekeeping and food and beverage. And there’s a third entity that has the brand. Companies like the Four Seasons or Ritz Carlton, we say they “flag” a hotel. They don’t manage it; they “flag” it. Trump has a few hotels, but mostly the properties are owned by other investors and he’s the “flag,” the name.

Given that case, that would inform a world view that has a high sensitivity to perceptions in what we call in real estate “the real economy.” Are the rooms full, and in which locations? Hotel people have a high sensitivity to what they perceive as “the financial economy.” They don’t know the inner workings, but “what are the interest rates?” They have high sensitivity to transactions and to partners, because everything’s a bespoke, one-off transaction. Typically, people like this also see the shared value. They seldom get into a zero-sum negotiation. They think, “How can we help each other?”
You’d expect someone like this to be very transactional, with a very high sensitivity to perception of current events, with a very high sensitivity to perceived financial prices, if not the inner workings of the financial market, and extremely high sensitivity to brand: What are people thinking? And you’d expect a much lower sensitivity to administration, to structure, to organizational dynamics, to long-term view, and to capital spending.

The incoming president has a really good sense for what people want to buy in that demographic. But going forward, one would expect that the temptation would be to continue to play your strong suit and try and express your own taste and your ideas because it’s worked for you for 50 years.
The second issue you’d expect of anybody in this situation would be that they’re probably quite confident in their own judgment. Having a very long record of reinforcement in making good decisions, for anybody, that would make them think they’ll be expert in other areas, whether it’s aviation or welfare or defense.

I think an early indicator will be: Can he persuade a different group of people? He’s so good at persuading the people he knows, but can he persuade Congress to act? If he’s a good communicator and good negotiator and good creator of shared value, he’ll figure out something that works for House Speaker Paul Ryan and for Senate Minority Leader Chuck Schumer. A second thing to look for is how much leeway does he really give to someone like Secretary of State nominee Rex Tillerson or to Wilbur Ross, the Commerce Department nominee, or to Vice President Mike Pence? It looks like he’s a person who hasn’t delegated a lot in the past. So those would be early things to see. And then there’s what he’d do in a crisis. From what’s been reported by the press, the crises in the past, he’s been able to bluster through. There may be different crises here, where it’s not a question of, say, talking firmly to your bankers.

For the most part, it looks like he’s always had the choice to walk away. In most of these project negotiations, he’s had a chance to do that. In the presidency, there will probably be negotiations — with Congress, with other nations, or with agencies or with all the people a president deals with — where you have to make a deal, and walking away is not a choice. It’ll be interesting to see how well he can create shared value in that context.

A lot of negotiations are also about leverage, and for the most part, he’s gotten himself in a very favorable position where he usually has the negotiating leverage. He may not have the leverage going forward. It’ll be interesting to see how he handles that. And can he use those negotiating skills and those communication skills and create shared value skills in a situation where there’s no walk-away option and he doesn’t have the leverage.

 “Command and control” management model

Nancy F. KoehnJames E. Robison Professor of Business Administration

I study business leaders, government leaders, religious leaders, social activists, and other individuals — past and present — who exercise real, worthy impact. As a historian, I don’t see huge differences among political and business leaders in terms of what makes them effective. Courageous, serious leaders are men and women who are animated by a big, honorable mission, who get things done to achieve that mission, who demonstrate consistent emotional awareness as they do this, who motivate others to try to be better and bolder in pursuit of this purpose, and who work (tirelessly) to become better leaders themselves while they are doing all these other things.

Thus far, we have not seen much evidence — either along the campaign trail or since the election — that Mr. Trump meets most of these criteria. But I think many voters perceived him as being successful in getting things done. Some of this perception was likely a result of his public confidence. Some may have resulted from his bluntness and his stated intent to cut through the red tape of Washington, along with its perceived stagnation, dominance by big money, and the sense that so many Americans have that the federal government is run by a small number of people calling all the shots.

I think his hard-charging tone, coupled with his willingness to single out certain groups — from the media to Muslims to women to Hispanics — as responsible for many of the nation’s problems unleashed reservoirs of frustration, anger, and fear among certain groups of Americans. History makes it clear that all leaders have to be able to understand and respond to emotional currents among the people they influence. And I think Trump did that on the campaign trail in ways that served his political purposes very well. It is much less clear that inciting such animosity — and indeed hatred — among certain groups of Americans toward their fellow citizens will serve our country well. Certainly, history offers no such assurances. In fact, leaders who have risen to power by relying heavily on collective anger and discrimination toward other groups have proven to be despots, tyrants, and men who destroy the values and institutions that lie at the heart of democracies.

Homing in on Trump’s reputation as a hard-charging man of action, we can perhaps think about his management style as one of “command and control.” This is a description in which the company, organization, or enterprise runs as a kind of military operation in which everyone lines up and falls in line. Although in the early 20th century many businesses were structured along such lines, “command and control” organizations have become much less common — outside of the military — in the last 40 or 50 years.

Today, businesses and other enterprises are flatter, much less hierarchical, and much more diverse than the companies that first grew to great scale and came to define the modern

industrial economy. This evolution is partly a result of globalization and the fact that many large organizations have become much more interdependent and complex; one-size-fits-all no longer works so well. This development is also a function of social, economic, and political change. Leaders now have to deal with a much broader set of stakeholders, including citizens, consumers, and labor around the world in a way that they simply didn’t half a century ago.

At the same time, business has become responsible for much more than simply “selling high and buying low” and “delivering a healthy return for shareholders.” Today, companies are being held accountable for a whole host of social and political issues, from labor practices to environmental policies. In this context, hard charging and “command and control” are perhaps overly blunt instruments.

I write and teach about individual leaders concerned with an honorable purpose, men and women who succeed against great odds. The people I study — from the explorer Ernest Shackleton to Abraham Lincoln to the environmentalist Rachel Carson — all have a great deal of deftness, meaning they understand the precept: “In this particular situation, what do I need to do to move my mission forward?” They also have great reserves of emotional awareness, which they apply to themselves and the people they are trying to influence. From this perspective, it seems to me that if you’re always on a hard-charging default drive, then it’s very difficult to pause and summon up the suppleness, care, and emotional acuity that leaders need in high-stakes situations.

I think the incoming president has been very successful in terms of how he’s managed the American media to his ends. I can count on two hands the number of leaders I have seen in my lifetime who could walk into a room, take the measure of a large crowd so quickly, and then move into that energy and bring them along to embrace his agenda at a given moment. He has done this over and over, not only among his political supporters, but also among reporters and other members of the press.

Despite these skills, which require some foresight, he appears to be extraordinarily reactive in his emotions, in his declarations, in the very heavy hammer that he wields across the board on different subjects as they come up, in real time, using social media. This is unprecedented. There is nothing in American history that compares with this aspect of his behavior: a public candidate and now president-elect, who is not only willing but eager to raise the public temperature so significantly, so often, and on such a widespread basis.

When I reflect on strong leaders, I usually see an important connection between a given individual’s decisions and his or her respect for the organization for which that person is responsible. Government leaders make choices affected by laws and the founding documents of a nation; judges issue decisions anchored in precedent; CEOs consider the values and mission of their companies; even disruptive entrepreneurs struggle to build an organization that will execute a larger end and then endure. This connection is critical because a worthy leader wants the people whom he or she motivates to respect the organization and to serve that enterprise from such a place. This means a leader is always working to deepen the sense of integrity that his or her followers accord the organization, including its values, its charter, and those charged with serving as stewards of these critical aspects. We have yet to see Mr. Trump evidence such respect or incite it among his fellow Americans.

Anyone we would say was an effective leader had the respect of his or her organization and toggled always back and forth between “what does this mean for the trajectory and the integrity and the character and the identity and the stability of my organization?” and “how is that related to my actions?” And that critical umbilical cord is, from my vantage point, not in sight here. I don’t see it. And I’m most troubled by that.

“Push” and “pull’ marketing to build public support

John A. QuelchCharles Edward Wilson Professor of Business Administration and professor in health policy and management at the Harvard T.H. Chan School of Public Health

Marketing is important in campaigning. It is equally important in governing. In 2008, Barack Obama won the presidency with an uplifting call for hope and change. He leveraged online media to attract volunteers and donors, building a swell of grassroots support. In 2016, Donald Trump also leveraged new media, notably Twitter, to generate grassroots support around his call to make America great again. Effective communications and wise targeting of resources against key voter segments, notably in swing states, were equally important in both cases.

Marketing in the world of politics is different from marketing in the world of commerce. In politics, you need majority support or at least a plurality to be successful. In commerce, you can be highly profitable as a niche brand appealing to a narrow segment of the population. In fact, being all things to all people is a recipe for disaster. The other noteworthy distinction is that the presidential marketer needs to win the vote on one day every four years, whereas the commercial marketer needs the cash register to ring every day.

Nevertheless, public opinion is important to any president, and President Trump enters office with a low popular approval rating. That will require him to hone his communications skills and to win over many people who remain skeptical of his motives and competency. He must consciously set out to escape the Washington bubble and stay in touch with the ordinary voters from whom he draws much of his energy and confidence. Their continued enthusiasm to lobby their senators and representatives will be important to his ability to legislate his campaign promises.

Governing as president therefore requires a combination of “push” and “pull” marketing. Coca–Cola pushes its products through retail distribution and at the same time advertises directly to consumers to generate demand that pulls the product off retail shelves. In the same way, President Trump must push his agenda through Congress, but strong popular support backing the agenda will help persuade legislators to vote accordingly.

A likely force benefiting small business

Karen MillsFormer administrator of the U.S. Small Business Administration (SBA) and now a senior fellow at HBS and at the Mossavar-Rahmani Center for Business and Government at Harvard Kennedy School 

Having a businessman in the White House has the potential to change the conversation in America around small business. Indeed, President Trump’s business background, if applied in the right way, could help him understand the needs of American small business. There are certainly thousands of small businesses that hope this will be the case.

However, to do this right, President Trump needs to step up the focus on small business and ensure this critical part of our economy is part of every economic discussion his team has. So far, his attention seems to be on big business — aside from his nomination of Linda McMahon as SBA administrator. Big business often has significantly different needs from small business. Small businesses have a more difficult time accessing capital, providing health care to their employees, navigating complex regulations at every level of government, and much more. His promises to cut taxes and reduce burdensome regulation for small businesses could be a good start. But on both of these fronts, the policy details will matter when it comes to what small businesses need to grow and succeed.

On the regulatory front, as I have written in a recent working paper, small business lending falls through the cracks of our current oversight framework. Small businesses and lenders should push President Trump to streamline the current “spaghetti soup” of regulation that is supposed to ensure greater access to capital, transparency, and borrower protections. Small businesses could also benefit from more incentives for large companies, which stand to get significant tax breaks under a Trump administration, to give more of their supply chain contracts to U.S.-based small businesses. In addition, National Federation of Independent Business surveys show that access to affordable health care is a top small business priority. Obamacare began to address this issue through the SHOP [Small Business Health Options Program] exchanges, but “Trumpcare” could go further in ensuring affordable rates for small businesses.

Small businesses should advocate for President Trump to treat them like the customer, something that can be done by leveraging technology and innovation in ways that streamline interactions with federal agencies, like online form filing.

Stars align to fix a broken tax system

Mihir DesaiMizuho Financial Group Professor of Finance and professor of law at Harvard Law School

The stars are in alignment for a major tax reform under President Trump. Thirty years of inaction on tax reform, along with significant changes in the economy and other countries’ tax policies, has made the U.S. tax system unwieldy and problematic in many ways. Most obviously, the corporate tax has become a dominant factor in the market for corporate control (i.e., so-called inversions), financing patterns (i.e., cash holdings), and profit-shifting activities (i.e., transfer pricing of profits).
In short, it’s broken and we have the worst of all worlds relative to the rest of the world. We have high marginal rates that distort incentives, especially on profit-shifting, and only middle-of-the-pack average tax rates. The ratio of tax-induced distortions to revenue is creeping higher every year.
The individual tax side of things is not quite as broken, but is overgrown and not serving our needs.

We have numerous overlapping and confusing incentives on education, health, and child care expenses that ultimately limit the uptake of these programs. We have enacted several stealth tax increases that are quite large by phasing out deductions and exemptions. And, broadly speaking, the tax system may not reflect the apparent current support for more redistribution. One reason for that is the top bracket used to contain 0.1 percent of the taxpayers and now has 1 percent of the population. This creates resistance to increased top marginal rates.

Finally, the usual guiding lights of equity and efficiency in tax policy now have to be complemented with a third concern: complexity. In the globalized world, there are ever-more margins on which economic agents can respond to complexities through planning. The overly complex system, especially on the international corporate side, is becoming a planner’s paradise.

What will President Trump do? His plan during the campaign was admirable in some ways. The simplicity of the rate structure for individuals, the expansion of the standard deduction, the limitation on deductions, and the reduced corporate rate were broadly sensible. But, there were critical mistakes, including repeal of international deferral and a minimum tax for corporate foreign source income. It was fiscally irresponsible and not attuned to current tastes for redistribution.

Given the relative inexperience of most of the current Trump economic team on these issues, I would expect that House Speaker Paul Ryan will dictate the broad outlines of any proposed legislation. His proposal, also known as the Ryan-Brady plan, is not just a renovation or a gut-rehab, it’s a teardown. It shifts the base of taxation to consumption from income through a “destination-based cash flow tax.” In effect, it is a form of value-added tax (VAT). Corporations will face a considerably lower rate, will not be allowed to deduct interest payments, and will be allowed to expense investments.

The easiest way to understand that is: Because all business-to-business transactions are effectively deductible, the tax base becomes business-to-consumers transactions. In other words, consumption.
One of the most important wrinkles in this system is that export revenue would be exempt from taxation, and the costs of imports would not be deductible under what is known as “border tax adjustments.” This has the potential for being incredibly redistributive across sectors, as exporters would have tax losses as far as the eye can see and importers would have much larger taxes due, unless exchange rates adjust to neutralize these changes in taxation, as economic theory would suggest.

Will they? It’s hard to say because nothing on this scale has ever been attempted. Moreover, the plan has numerous question marks over how it would work. How would financial institutions get taxed? Would pass-through entities have their current treatment? Most importantly, it’s not clear it would pass muster with the World Trade Organization.

The key advantage to Trump of the Ryan-Brady plan may well be the ability to characterize the border tax adjustments as tariffs. The box he put himself in regarding protectionist measures can be escaped by implementing the plan and labeling those adjustments as tariffs even though they’re not really functioning in that way. From an economic perspective, that deceit is preferable to the realities of tariffs. In recent tweets on auto companies, he’s already changed his language to a “border tax,” from tariffs.

I think the risks of such a dramatic tax change are too great to justify the teardown. I’d prefer to see corporate tax reform proceed in a revenue-neutral way, with reduced rates and a shift to territoriality funded by changing the treatment of pass-throughs and by aligning the characterization of profits to tax authorities and capital markets. On the individual side, I think a significant expansion of the earned-income tax credit, unification and simplification of various credits and deductions, and a new top bracket for individuals making more than $1 million would help enormously.

How does Trump’s business background condition his policy preferences and methods? It’s critical to realize that real estate development is quite unique in business, and the traits that allow you to succeed, to the degree he’s succeeded, in that field are not necessarily representative of the traits required elsewhere in business.

Real estate development requires much more sharp-elbowed negotiating, coalition building between organizations, and marketing savvy than most types of business. It also tends toward monumental efforts rather than incremental change. Those skills might help him quite a bit in the Washington of today. Unfortunately, they could also result in a tweet-driven assemblage of hollow gestures (saving jobs via jawboning) without any real substance.

These interviews have been edited for length and clarity.

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Wednesday, January 18, 2017

IMF says demonetisation a big dampener, cuts India's growth to 6.6% from 7.6% 01-18

The IMF today cut India's growth rate for the current fiscal year to 6.6 per cent from its previous estimate of 7.6 per cent due to the "temporary negative consumption shock" of demonetisation, days after the World Bank also decelerated India's growth estimates.

"In India, the growth forecast for the current (2016-17) and next fiscal year were trimmed by one percentage point and 0.4 percentage point, respectively, primarily due to the temporary negative consumption shock induced by cash shortages and payment disruptions associated with the recent currency note withdrawal and exchange initiative," the International Monetary Fund (IMF) said in its latest World Economic Outlook (WEO) update released today.

The IMF said that after a lacklustre outturn in 2016, economic activity is projected to pick up pace in 2017 and 2018, especially in emerging market and developing economies.

The global growth for 2016 is now estimated at 3.1 per cent, in line with the October 2016 forecast.
Economic activity in both advanced economies and emerging market and developing economies (EMDEs) is forecast to accelerate in 2017-18, with global growth projected to be 3.4 per cent and 3.6 per cent, respectively, again unchanged from the October forecasts, it said.

As per new IMF projections, India's growth in 2016 is now estimated to be 6.6 per cent as against 7.6 per cent earlier forecast.

In 2017, IMF has projected a growth rate of 7.2 per cent as against its previous forecast of 7.6 per cent.

The Indian economy is likely to revive to go back to its previously estimated growth rate of 7.7 per cent in 2018, according to the WEO update.

The cut in India's growth rates comes days after the World Bank decelerated India's GDP growth for 2016-17 fiscal to 7 per cent from its previous estimate of 7.6 per cent citing the impact of demonetisation. But forecast issued on January 11 said that India would regain momentum in the following years with a growth of 7.6 per cent and 7.8 per cent due to a reform initiatives.
Despite IMF's downward revision of India's growth rate and a slight upward revision of China's growth projections, India continues to be the fastest growing countries among emerging economies.
But in 2016, China with 6.7 per cent has edged past India (6.6) with 0.1 percentage point.
The growth forecast for 2017 was revised up for China (to 6.5 per cent, 0.3 percentage point above the October forecast) on expectations of continued policy support, the IMF said. India's growth rate in 2017 as per the latest IMG projections is 7.2 per cent.

In 2018, China's growth rate is projected to be 6 per cent against India's 7.7 per cent.
IMF said, in China, continued reliance on policy stimulus measures, with rapid expansion of credit and slow progress in addressing corporate debt, especially in hardening the budget constraints of state-owned enterprises, raises the risk of a sharper slowdown or a disruptive adjustment.

These risks can be exacerbated by capital outflow pressures especially in a more unsettled external environment, the IMF said.

IMF said global activity could accelerate more strongly if policy stimulus turns out to be larger than currently projected in the US or China.

Notable negative risks to activity include a possible shift toward inward-looking policy platforms and protectionism, a sharper than expected tightening in global financial conditions that could interact with balance sheet weaknesses in parts of the euro area and in some emerging market economies, increased geopolitical tensions, and a more severe slowdown in China, it said.

Maurice Obstfeld, Economic Counsellor and IMF Research Department Director, at a news conference here, said among emerging economies, China remains a major driver of world economic developments.

"Our China growth upgrade for 2017 is a key factor underpinning the coming year's expected faster global recovery. This change reflects an expectation of continuing policy support; but a sharp or disruptive slowdown in the future remains a risk given continuing rapid credit expansion, impaired corporate debts, and persistent government support for inefficient state-owned firms," he said.

In light of the US economy's momentum coming into 2017 and the likely shift in policy mix, IMF has moderately raised its two-year projections for US growth.

"At this early stage, however, the specifics of future fiscal legislation remain unclear, as do the degree of net increase in government spending and the resulting impacts on aggregate demand, potential output, the Federal deficit, and the dollar," Obstfeld said.

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